The Saudi Oil Price War Is Backfiring

Oilprice.com ^ | 08-07-2015 | Wet Towel

[bananaman22]

Saudi Arabia has long enjoyed the status of being the top crude oil exporter in the world. With record production of 10.564 million barrels per day in June 2015, Saudi Arabia has been one of the major driving forces behind the current oil price slump.

The Saudis have kept their production levels high since last year in order to drive other players (especially U.S. shale drillers) out of business. Equally clear is the fact that this strategy of maintaining the glut and driving out rivals hasn’t worked so far.

Even when we look at the refining sector, we see that the oil kingdom has been following a similar strategy of flooding the markets with refined fuel. The Saudis have already sparked an oil price war with the Asian refiners downstream by offering close to 2.8 million barrels of low sulfur diesel to the European and Asian markets. This has caused Asian refining margins to fall drastically, the effects of which can ironically now be seen on Saudi Arabia itself.

[Bubba Ho-Tep]

It could implode and crush the royal family soon

Be careful what you wish for. It's not like a western democracy is likely to take their place.

[Mr Radical]

"Saudi Arabia is returning to the bond market with a plan to raise $27bn by the end of the year, in the starkest sign yet of the strain lower oil prices are putting on the finances of the world’s largest oil exporter... Fahad al-Mubarak, the governor of the Saudi Arabian Monetary Agency, said in July that Riyadh had already issued its first $4bn in local bonds, the first sovereign issuance since 2007.
Financal Times August 5th 2015

[bestintxas]

one who depends upon nothing but natural resources is not viable unless there is a demand for same.

Russia has no large technology company, insurer, bank or other businesses which are sought after independent of natural resources such as the Western World possesses.

That lack of diversity under the current dampening of oil prices is telling.

[1010RD]

There’s also the theory that the Saudis are not keeping prices low, but the market is.