Saudi Arabia has decided it’s happy with $60 a barrel crude oil, and apparently their Sunni oil partners around the Persian Gulf agree.
Paradoxically, Russian greed seems to be a factor in keeping crude prices low (along with waves of crude coming from American shale.) They need $100 a barrel oil, but they’re too desperate to cut production to achieve it.
“The market will stabilize itself eventually,” Mr. al-Naimi, Saudi Oil Minister said. Supply and demand. What a concept.
They hope the glut will eventually “force” non-OPEC producers like the US to reduce production. Fat chance. Maybe in the long run–as in three to five years–but the governments I mentioned Saturday will be hurt now, and those aren’t people known for their patience and cooperative spirit.
I expect one or more of them will first try to persuade, then pressure the Saudis to cut production. If that doesn’t work, one of them may resort to what George Lucas termed “aggressive negotiations.”