The Saudis have indicated their willingness to tolerate lower oil prices, and pump heavily. Is it part of a nasty game with the US and Russia? Is it an experiment to see what the take-out level is for US oil drillers?
With Obama in office, I’m so paranoid that I can’t just take what should be the economic gift horse of low prices at face value.
If it makes you feel better, medium term the Saudis (and other mideast oil sellers) are totally screwed.
Their new biggest best customer is a country with mafia business practices and 1.5 billion expendable people to enforce them.
The Chinese won’t kiss butt like the US and Euro have.
Nothing like an oil glut to benefit the US party in power just before an election.
But undermining Russia (which as we all probably recall, laughed at an offer from the House of Saud to get out of Syria, where it doesn’t belong, in exchange for getting to sell the Saudis a bunch of arms), particularly in Europe where Putin sells into 42 percent of the market, is a likely goal; undermining their Iranian enemy, particularly since Iran is an ally of convenience for their Russian enemy, makes this easy to understand.
Furthermore, there’s been far too little discipline in the OPEC membership since the price of crude soared under Obama and has stayed high, even though it has come down a bit in recent weeks.
We’ll see if Iran finally triggers WWIII by trying to shut down the oil delivery route through both the Red Sea and the Persian Gulf, while pushing for the overthrow of various states in western Africa, some of which are oil-rich.