Call it the Saudi calculus.
Oil prices were already plummeting 14 months ago when, at Saudi Arabia’s insistence, OPEC put the global petroleum industry on notice: The member countries would not try to prop up prices by cutting production.
“We don’t want to panic,” Abdalla el-Badri, secretary general of the Organization of the Petroleum Exporting Countries, told reporters at the group’s November 2014 meeting in Vienna. “We want to see how the market behaves.”
Since then, the market has behaved in a way few could have predicted — including Saudi Arabia, the world’s biggest oil exporter. The price of oil has collapsed under the weight of a growing international glut, made worse by slower growth in the global economy.
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WNU Editor: Their strategy is not working so far, and they are burning through their financial reserves like most of the other petro-states. And while they may hope that these low oil prices will bankrupt their competitors, countries like Iran are not going to cut oil production, and in the U.S. there are many other groups with capital who will jump in once oil prices stabilize.
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