The Hidden Agenda Behind Saudi Arabia’s Market Share Strategy

Do the Saudis have an oil market strategy beyond pumping crude to defend their market share? Are they indifferent to which countries’ oil industries survive? Or, alternatively, are they targeting specific global competitors and specific national markets? Did they start with a particular strategy in November 2014 when Saudi Petroleum and Mineral Resources Minister Ali al-Naimi announced the new market share policy at the OPEC meeting in Vienna and are they sticking with it, or has their strategy evolved with the evolution of the global markets since?
And, of course, what does the Saudi strategy beyond pumping crude portend for the Saudi approach to some OPEC members’ calls for coordinated production cuts within OPEC and with Russia?
Conventional Wisdom
Conventional wisdom has it that the Saudis are focused primarily on crushing the U. S. shale industry. In this view, the Saudis blame the U. S. for the supply-demand imbalance that began to make itself felt in 2014. U. S. production data seems to support this. Between 2009 and 2014, U. S. crude and NGLs output increased nearly 4 million barrels per day, while Saudi Arabia’s increased only 1.64 million barrels per day, Canada’s 1.06 million, Iraq’s 0.9 million, and Russia’s 0.7 million (Saudi data doesn’t include NGLs).

This post was published at Zero Hedge on 02/12/2016.