Publications: Notes at the Margin

A Saudi Christmas Present for Harold Hamm (December 8, 2014)


Saudi Arabia just sent Harold Hamm an early Christmas present. It was a large lump of coal. Hamm is CEO of Continental Resources, one of the major proponents and developers of fracking. He owns sixty-eight percent of the firm. In October, Hamm closed his company’s hedges, bravely stating on a television show sponsored by Platts that crude oil production from shale was not threatened by falling prices.


The present was not, as we said, a lump of coal, but it might as well have been. Instead, it was a change in the pricing differentials for crude purchased by Saudi Aramco clients. The most critical of these affected the Arab Light, Arab Medium, and Arab Heavy sold to Asian buyers. The Saudis raised the discounts to Asia $1.90 per barrel for Arab Light, $1.85 for Arab Medium, and $1.80 for Arab Heavy. In this week's report, we provide the details on the differential change and discuss the implications for other oil producers.


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