"King Salman, Saudi Arabia’s new ruler, probably will stick to the oil policy of his predecessor, the late King Abdullah, maintaining production levels to preserve market share even at the cost of depressing prices.
...
The kingdom’s refusal to surrender market share to rising U.S. output has contributed to the worst slump in prices since the global credit crisis of 2008."
-Bloomberg (emphasis added).
I see. That is at least part of the reason why prices have fallen 50%. And since American "output" of oil is up (fracking, "the natural gas revolution") and American demand is not increasing as much due to "the green revolution" a glut exists, the oil just sits there, and prices fall.
The Saudi strategy here is to make further fracking too expensive. At the current oil price it doesn't pay frackers or whatever they're called (they who frack), they're already stopping. So the Saudis are going to let this glut soak its way through 'cause their conventional drilling still pays at these prices, they'll maintain their market share and they'll delay the frackers.
Sounds like a plan. Good plan for the Saudis; good plan for American consumers in the near term, bad plan for others, the frackers in the Pennsylvania Oblast and the drillers in Russia. Bad plan for Rooski.
...
The kingdom’s refusal to surrender market share to rising U.S. output has contributed to the worst slump in prices since the global credit crisis of 2008."
-Bloomberg (emphasis added).
I see. That is at least part of the reason why prices have fallen 50%. And since American "output" of oil is up (fracking, "the natural gas revolution") and American demand is not increasing as much due to "the green revolution" a glut exists, the oil just sits there, and prices fall.
The Saudi strategy here is to make further fracking too expensive. At the current oil price it doesn't pay frackers or whatever they're called (they who frack), they're already stopping. So the Saudis are going to let this glut soak its way through 'cause their conventional drilling still pays at these prices, they'll maintain their market share and they'll delay the frackers.
Sounds like a plan. Good plan for the Saudis; good plan for American consumers in the near term, bad plan for others, the frackers in the Pennsylvania Oblast and the drillers in Russia. Bad plan for Rooski.
