Oil demand is low because of weak economic activity, increased efficiency, and a growing switch away from oil to other fuels. America has become the world’s largest oil producer. Though it does not export crude oil, it now imports much less, creating a lot of excess supply. Finally, the Saudis and their Gulf allies have decided not to sacrifice their own market share to restore the price. They could curb production sharply, but the main benefits would go to countries they detest such as Iran and Russia. Saudi Arabia can tolerate lower oil prices quite easily. It has $900 billion in reserves. Its own oil costs very little (around $5-6 per barrel) to get out of the ground
Posted on: Tue, 23 Dec 2014 22:05:28 +0000
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