Linked with Loren Steffy’s blog: http://www.forbes.com/sites/lorensteffy/
“ Saudi Arabia’s announcement declared that it had no plans to slow production.”
As we know, Saudi Arabia is the largest crude oil producer in the world. It means Saudi Arabia has the power to manipulate, or say, at least influence the world oil price (After all, there are competitors such as other OPEC producers). If Saudi Arabia doesn’t reduce its production, then the supply of oil will not go down. The final result is the present situation where supply exceeds demand won’t be changed, thus, the decrease in the oil price.
“ The Saudis appear willing to allow prices to keep sliding, because they can still gain profits from oil at as little as $30 a barrel, at the same time, to grab a larger share of the global market.”
Thanks to the Saudis’ inherently competitive advantage, specifically, the access to high-grade natural resources and the low cost production structure.
His blogs attracts me because recently the world oil price has been the hot topic, and he explains what he thinks very clearly. Even people like me who barely know any about oil can get his points.
Sources:
http://www.forbes.com/sites/lorensteffy/2014/10/16/cheap-oil-the-kingdom-strikes-back/
http://www.forbes.com/sites/lorensteffy/2014/11/04/oil-below-80-the-first-shoes-drop/
Image:
http://www.google.com