Angry Saudis Could Drown Slow Market With More Oil


Over the course of the past 30 months, Saudi Arabia has been able to defiantly ignore the economic principle of supply and demand. The problem is that its refusal to cut back in order to both trigger that demand and also deliver a knockout blow to the shale industry in the United States has failed. Prices have remained the same for the most part over the past year.

The reason for this approach stems from the fact that decades have infused trillions of dollars into the treasury of the Kingdom’s coffers. In addition, the cost of oil production per barrel can be as low as just $9, an amount that still offers plenty of profit.

The problem is that there’s no apparent end to the stagnating prices. Now, after first hinting that it might consider production cutbacks, the Saudis reacted with a frustrated threat to Middle Eastern neighbor Iran following the Vienna OPEC meetings in late October. The two countries had been trying to find a happy medium when it comes to the level of production, but Iran continues to balk at any cutbacks.

One of the key concerns is that the Iranians, who struggled under years of economic sanctions, have plenty of oil to sell and need revenue to bolster their economy. The fact that profit from such sales has dipped considerably doesn’t seem to be of much concern to them. Thus, the reluctance to focus on any cutbacks, which has flown in the face of Saudi Arabia’s new approach.

The Saudis had taken the drastic step of replacing the Kingdom’s finance minister in an attempt to smooth negotiations. That was met with apathy from Iran, which sparked an immediate threat to boost oil production to as much as 12 million barrels per day.

  • Saudis Russians Oil Production Cut Extension

    Saudis and Russians Come Together on Oil Production Cut Extension

    The three-year slide of oil prices has delivered a major hit to the financial stature of Saudi Arabia, primarily because of their status as the world’s top oil producer. While that title has seemingly fluctuated in the past year with Russia, the economic punch that those two nations provide has the ability to provide an…

  • saudi arabia equtorial guinea economic forum

    Saudi Arabia and Equatorial Guinea Come Together

    During an economic forum in Jeddah, Saudi Arabia and the West African nation of Equatorial Guinea came to an agreement on May 11 that brings the two countries together on a variety of business projects. One of those is an agreement that will help finance what will be the region’s largest terminal for oil storage….

  • saudi arabia owns largest american oil refinery

    Saudi Arabia Now Fully Owns Largest American Oil Refinery

    Though the impact of Saudi Arabia within the American oil market has been diminished over time, their ability to maintain a very clear presence once again came into focus on May 1. That was when Saudi Aramco, the Kingdom’s state-run oil company, finalized an agreement to take complete control of the largest oil refinery in…