Who Will Rule the Oil Market?
Over a million barrels per day were also taken off the market by sanctions imposed on Iran. Without that big surge of shale oil from the United States, it is highly likely that those sanctions would have failed. Prices would have spiked, countries seeking cheaper oil would have broken ranks — and Iran might not be at the nuclear negotiating table today.
.. But Saudi Arabia and the other gulf countries declined to do so. If they reduced production, they reasoned, they would lose market share permanently. As they saw it, they would be cutting back on their “low cost oil” to make room for “high cost oil,” and then would have to make more cuts to accommodate more high cost oil.
.. They did not want to give up markets to Iraq, a country they see as an Iranian satellite, and whose output is increasing. And they certainly did not want to make way for Iran, which they thought might come to a nuclear deal with the United States and its allies, bringing that missing Iranian oil back into the market.
.. Saudi Arabia is hoping that lower oil prices will stimulate economic growth and demand for oil.
.. Over all, the fall in oil prices could mean a $1.5 to $2 trillion transfer from oil-exporting countries to oil-importing countries.