Saudi Arabia’s Oil Strategy Is Changing

Saudi Arabia is talking the oil market up lately. Moreover, it has been hiking oil prices.

29.Jun.16 11:26 PM
By Anastasia Sutulova
Photo Toinnov.com

443

It was February 2014 when Ali al-Naimi, Saudi Arabia’s petroleum minister at the time, threatened American oil producers that they would be crushed by the oil oversupply. It was very close to what actually happened when an on-going price war took oil close to $20.

Last week, Saudi Arabia’s new petroleum minister Khalid Al-Falihhad proclaimed that such policy is over and there will be no oversupply any more.

What led to this? Several things.

First, American oil companies have really been crushed. As a result, they were unable to supply new oil to the market, which could compete with the one Saudi Arabia produced. Second, two years of the price war, which led to oil prices dropping from $107 to $26, created fiscal and social gaps. To close them, Saudi Arabia’s government needs more cash. Third, Saudi Arabia has a new oil minister to make sure that it will happen.

According to INNOV, in the meantime, oil producers should get ready for another rough ride that might take crude oil to $40 or less before it takes it to $60.

Back to the list

Related Information:

World, Business and Lifestyle News