The Saudi strategy is very short sighted. Those countries that are offline or falling behind on production won’t stay that way forever. They are not likely to diversify because the reasons they’re offline or falling behind are directly linked to their culture/governance model. Eventually, things will get so bad that a new dictatorship will come online and get things going.
The Saudis won’t drive other oil producers out of business, unless they’re able to empty the reserves in other countries. The new oil prices are permanent and will fluctuate over time, but within a narrow range.
US producers won’t sit on their hands. They’ll continue to innovate so as to use and profit from a valuable resource. If they’re able to improve across upstream, midstream and downstream incrementally by say 3% annually, in 23 or so years they’ll have doubled profits/productivity or whatever metric the 3% applies to.
The only way for the Saudis (and Kuwait/UAE) to win by this strategy is to end American innovation. While possible, we’re a long way off from there.
I disagree. I think they are very long term sighted; probably more than anyone else.
I see their actions as determining where the price of oil can remain without a continued loss of their market share. If the stable price of oil is $60, they will work at that price.
At $100 dollars, the world confirmed that was enough for private industry to significantly grow production outside of OPEC. Good for us, bad for them, in the long run.