Saudi Arabia: Don’t Dig a Ditch for Another…
Saudi Arabia, as facts and speeches of members of the Saudi government suggest, has declared merciless war on companies extracting shale oil in the United States. According to Saudi newspaper Al Jazirah, Saudi Arabia will play for a fall in world oil prices until these producers as well as other competitors leave the world oil market. In other words, the Saudis will make every effort to ensure shale oil, oil extracted from bituminous sands and offshore projects around the world bring no profit, and in doing so, will try to destroy its rivals and dominate the world oil market. Here is what objective reality looks like, though: since the production of shale oil in the United States is on the rise, the country can exercise a more relaxed financial policy. The Saudis cannot manipulate the production of shale oil in any way; all they can do is try to knock the prices down. So far, this is the only strategy that Saudi Arabia can adopt.
On the one hand, the position of the Saudi rulers is understandable. After all, not only is the cost of oil extraction the lowest ($ 4-5) in Saudi Arabia, but it also has the most convenient system of oil shipment since all the ports are located in the immediate vicinity of the oil drilling sites. Owing to these facts and to the high oil prices of the past years, Saudi Arabia, as is noted by the financiers, is financially stable, and has accumulated very large reserves, which can be used to replenish its current budget and thereby compensate for the losses incurred by falling oil prices.
