Oil Shale War

Saudis Declare Victory in Oil-Shale War


From all appearances, a ceasefire in the battle between Saudi Arabian oil production and the American shale oil industry has been declared. The country’s energy minister, Khalid Al-Falih, indicated that because the oil glut that effectively collapsed the market in mid-2014 has disappeared, it’s a clear sign that prices will be rising again back to their previous lofty levels.

The shale market, which has been greatly expanded within much of the last decade, helped start the plunge of a barrel of oil. At the time the battle began, the price of oil was in the range of $107. By the time the price had bottomed out, it had dropped to $27, with the busy summer months having boosted that price back near $50 per barrel.

Despite the slide, Saudi Arabia chose to continue pumping oil. One reason was that the country could still make a profit as long as the price didn’t drop below $20 a barrel. Another factor was the need to accommodate increased demand from areas like India and China. However, the real strategy was to drive as many of the shale companies out of business as possible.

The strategy became especially evident in November 2014, when Saudi Arabia refused to make production cuts to boost oil prices that were still in the free-fall phase.

To a certain extent, the plan worked as 80 companies have since gone out of business. Still, there currently are no signs that the barrel price will reach triple figures again anytime soon.

While waiting for that, the Saudis must also deal with concepts like electric cars that are specifically geared toward eliminating or least reducing the need for oil. The country’s answer is known as Saudi Vision 2030, which seeks to triple the non-oil exports by that year.

  • 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…