Secret Saudi oil game pushing OPEC members toward fiscal cliff

“…The problem with the Saudis’ low-price strategy is that it hurts OPEC, too. Its 12 member states are not created equal. The ones in the Gulf – Saudi Arabia, Kuwait, Qatar and the United Arab Emirates – probably have the financial muscle to endure low prices for some time, perhaps a few years. Not so the weak OPEC members – Venezuela, Nigeria, Libya and perhaps Iran. The world of $60-(U.S.)-a-barrel oil is pushing them toward the fiscal cliff. If OPEC falls apart, it won’t be because it has lost control of a market swimming in American oil; it will be because the low-price policy is sabotaging the economy and finances of a few of its own members. OPEC is becoming a cannibal family, one that eats its own…”

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  • Lorensacho

    Saudi Arabia is punishing Iran.

    • Yes and Russia as well, it has deep pockets but even they can’t sustain this price level forever.

    • Mark DeFord Eletion

      The Saudi policy will also both help and harm the US. On the plus side, our economy may experience a rebound for a while, until the price goes up again.

      It also makes less expensive the campaign against the caliphate, which I suspect is the real reason for the lowered oil prices. Maintaining the petrodollar agreement, which requires defending the saudi royal family, may be the real reason for most of the US’ warfare in the middle east. Everything the US does there seems to benefit the saudis, and rarely anyone else. It always looks to me like the Sauds decide what the US must do to defend them.

      At the same time, these low oil prices will harm the US by interfering with our efforts to wean ourselves off of arab oil.

  • Let’s hear it for the US oil industry.

    American free enterprise kicks the butt of the oil cartel.

    Ha ha ha.

  • Lorensacho

    The Saudis have no reason to penalize Russia and I seriously doubt that they are keeping oil prices low to placate America. Saudi Arabia is in a death match with Iran and attacking Iran’s economy may make Iran pull in it nuclear and terrorist horns. It probably won’t work though because Iran is led by religious fanatics.

  • Jay Currie

    Other than postponing investment in Canada oil Sands and BC natural gas it is hard to see a downside for Canada. Franking in the US will slow down… On balance limited downside. Hitting get OPEC members and Russia… Cool. Plus cheaper gas and renewable boondoggles like wind look even sillier.

    • ntt1

      oil prices will rebound but now ,due to improved extraction technology in North America there is a price ceiling on arab oil that has never existed before.

  • Kit Ingoldby

    Russia, Iran and Venezuela are suffering. Cry me a river.