Today’s Pickup: Saudis make veiled threat to oil markets

Black oil pump jacks in the desert of Bahrain. (Photo: Shutterstock)

Good day,

Saudi Arabia is the world’s largest exporter of oil, and ever since the 1973 Arab embargo triggered the first oil crisis, it’s been considered out of bounds for the oil-rich country to use their number one commodity as a political weapon. On Sunday, in a statement, they crossed that line—at least implicitly. In referring to their petroleum wealth, they noted their economy “has an influential and vital role in the global economy.” The statement comes as retaliation is being considered related to the disappearance of Washington Post columnist Jamal Khashoggi.

Roger Diwan, a longstanding OPEC watcher at consultant IHS Markit Ltd., told Bloomberg the Saudi comments broke “an essential oil market taboo.”

Many analysts doubt the Saudis would actually follow through with such threats, but oil anxieties across the Middle East are nevertheless ratcheting up.

Did you know?

The North American Council on Freight Efficiency (NACFE) studied two-truck platoons and found about a 4% fuel savings overall – as much as 10% for the following truck.


“The transportation and logistics industry in Tennessee continues to gain momentum with more than 245,000 Tennesseans employed in this sector. When companies like FreightWaves continue to invest in our state, it will help Tennessee lead in the creation of high-quality jobs.”

—Tennessee Gov. Bill Haslam

In other news:

JP Morgan and Ford cancel plans for Saudi investor event

The latest such high-profile announcements after the disappearance of Saudi journalist Jamal Khashoggi. (Reuters)

Among the ruins of Mexico Beach stands one house, built ‘for the big one’

The elevated house that the owners call the Sand Palace, on 36th Street in Mexico Beach, Fla., came through Hurricane Michael almost unscathed. (New York Times

Waymo racks up 10 million test miles ahead of launching its robotaxi business

Its 600-vehicle fleet needed just over a month to log the latest 1 million miles, coming after Waymo hit 9 million on August 30. (Forbes)

US threatens to act over China’s online cost advantage on postal fees

The US president is now on a collision course with the Universal Postal Union (UPU) and has threatened “repercussions.” (The Loadstar

Lavazza and Illy say ‘basta’ as global coffee wars come to Italy

Global giants Starbucks Corp. and Nestlé SA are making inroads into their territory. (WSJ

Final Thought:

Investors have been impressed with what North American railroads have achieved in the 21st century in terms of efficiency and profitability; railroads went from moribund, bloated legacy businesses to achieving the best operating margins in the global transportation industry. We wonder, though, what the next steps will be. Will a return to ambitious volume growth come at the expense of OR? Will years of declining capex finally come home to roost in the form of increased accidents, infrastructure decay, and service levels dropping past what customers can tolerate? Finally, how will softening spot rates in the truckload sector—widely forecast for next year—affect railroads’ ability to grow volumes, especially if freight demand falls off? 

In the next year or two, we should start see how railroad executives, investors, regulators, and customers strike the balance, and we’ll begin to get a sense of what the first true post-Harrison strategy for adding value to railroads looks like.

Hammer down, everyone!

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Chad Prevost

Chad is radio host and broadcast media specialist for FreightWaves.