There will be no winners here. especially KSA, they need oil at at least $50 and more like $70 or $80 to make it all work. $100 a barrel would be ideal. They will be eating into their capital reserves trying to stay afloat and will be forced to sell more of Aramco to raise cash. at a lower price.
They did it five years ago and it didn’t seem to hurt them too much at all.
Well of course they want the highest price possible. But they cannot control the market. All the OPEC members break their quotas, but this year they couldn’t even come to agreement on their quotas. Russia said it would not abide. So the KSA decided to slash prices and increase production. I think they can produce up to 11-12 million barrels per day. And they have the lowest cost of production of anyone. So if oil drops 25% but they ramp production 15% they don’t lose too much net net at the end of the day.
I think other factors are also at play. Harm Iran is definitely on the list of positive side effects. And, burn the alternative sector like fracking and shale oil producers who need $30-$40 oil to stay in business.
And also, it harms Russia. Russia is more diverse an economy but they may be getting a bit overstretched with their foreign adventurism. Iran is one of Russia’s biggest customers. So Russia will take a hit. And I am sure the KSA doesn’t like seeing Russia in Syria or in Africa.
Do you suppose there could be a reason SA jumped at Trumps offer to help them get away from being a nation whos economy is based on oil?
Have you considered why a nation like SA would think that a plan like that is a good idea?