The difficulty in trying to keep all OPEC nations in line has never been more evident than during the past two years. That coincides with the steep drop in oil prices that show no real sign in moving upward anytime soon. For Saudi Arabia, that stagnancy has evolved from a defiant approach to one of grudging acceptance about the reality of the situation.
That reality is why the Saudis, along with most of the other members of OPEC, are now ready to reduce their peak oil output by four percent. That announcement, at the organization’s meeting in Algeria, has been a long time in coming, with the finances of the Kingdom have played a prominent role in the decision.
When the drop started taking place in mid-2014, the belief was that it was only temporary. When prices continued to tank, the Saudis chose to actually increase production. Their belief was that such availability would help serve as a potent counter-punch to the burgeoning shale market in the United States.
No such thing happened and the end result has been a depletion in the available funds for Saudi Arabia. Even though that amount still has trillions of dollars available, the effect was harsh enough that the Kingdom is now cutting back on some of their stateside funding.
Three countries have reportedly received exemptions because of their current political situations. Libya and Nigeria have had issues with wars and other fights against terrorism. Meanwhile, Iran has emerged from crippling financial sanctions and has been even more emphatic than the Saudis about increasing production.
One other OPEC nation, Iraq, has tried to join that trio but doesn’t appear to be getting much support. The Iraqis claim that their oil revenue is vital to fighting the growth of the ISIS terrorist group.