No, you're absolutely wrong. Saudi Arabia was FLOODING the market with oil since 2015. They were producing at historical levels in 2016, even in the face of plummeting oil prices.
Why do you think that is? The only reason why they flooded the oil markets with oil is because they wanted a low oil price. And the very simple explanation for this is because they wanted to starve ISIS from all their extra money they were receiving from black market oil.
They eased off a bit because they've achieved their goal to maintain rock bottom prices, but they're still producing > 10M barrels a day.
There's an oil glut because Saudi Arabia and the US want an oil glut. There's no sane reason why Saudi Arabia increased production to historic levels in the face of $40/barrel oil prices except for the fact that they want a low oil price.
Look, you are right that Saudi Arabia flooded the market, but there are many much more plausible and, perhaps more meaningfully, publically stated reason why they did this.
- they were trying to starve out oil sands and other alternative oil sources to ensure they don't continue to come online in the near term, this has had some success as anyone in Calgary or Edmonton will tell you.
This is far and away the biggest threat to Saudia Arabia's oil business and probalby the first thing you should look into.
- they need money, they essentially buy peace in their own country by showering it with money. As oil prices fall due to more oil being available, they have to sell even more to make their budgets balance. Russia is also doing the same.
I'm sure ISIS is in their minds but its much more of a happy conincidence.
I mean oil isn't bitcoin, you can't just send it over the internet. ISIS was selling to Syria, If you want to stop ISIS from selling oil to Syria, then wouldn't you just ask Syria to cut it out and if they didn't listen then wouldn't you start bombing them..... hmm sounds familiar
Always look for the simplest answer first, just shouting ISIS doesn't make a whole lot of sense when you consider how much the depressed price of oil has hurt Saudia Arabia int he past few years.
Exactly, look at the simple answer, as you said. I'm not sure why people think this is such a controversial viewpoint. It's pretty obvious that ISIS was a big threat in 2015-2016 to the entire Middle East and that just so happens to correspond to when Saudi Arabia started acting irrationally in terms of its oil output. I'm not sure why this is so hard to believe that it's related.
The oil sands have been in business for the last 40 years. You're telling me now is when they feel the Canadian oil sands are a threat? In the last 2 years is when they decide to act irrationally and start dumping oil? Hogwash.
ISIS controlled large portions of Syria's oil output. But their operations in Iraq are much larger.
Also from the article:
ISIS used to earn some $30 million monthly from its oil operations, but revenues were down to around $15 million a month at the beginning of the year, according to Christopher Garver, spokesman for Operation Tidal Wave.
ISIS's claim to be a caliphate hinges on their ability to maintain a government-like status. They can continue doing this if they make $30M/month. But the US is hamstrung because they want to stop ISIS from taking advantage of the oil in Northern Iraq, but they can't bomb all the fields, otherwise it will cripple Iraq going forward.
So the best way to hurt ISIS and the Caliphate is by hitting their major source of income, which is oil, but cutting the price. If legit oil is $40/barrel instead of $100, and the caliphate can't afford to maintain their structure, then it implicitly collapse. Did you notice that after Hurricane Harvey, the US used that as an excuse to dump oil from the SPR? The problem isn't oil, it's the refineries in Houston that were taken offline. Releasing oil from the SPR made no sense because we're already in a glut, except to keep pressure on oil to stay low.
Again, I don't know why this is so hard for some people to believe. It's not a conspiracy theory, it makes a lot of sense, and I support it.
When the Saudi's tanked the price of oil, I assumed it was engineered by the USA to kick Russia's economy in the nuts in retaliation for their actions in Ukraine, Syria.
https://www.bloomberg.com/news/articles/2017-02-20/saudi-ara...
Why do you think that is? The only reason why they flooded the oil markets with oil is because they wanted a low oil price. And the very simple explanation for this is because they wanted to starve ISIS from all their extra money they were receiving from black market oil.
They eased off a bit because they've achieved their goal to maintain rock bottom prices, but they're still producing > 10M barrels a day.
There's an oil glut because Saudi Arabia and the US want an oil glut. There's no sane reason why Saudi Arabia increased production to historic levels in the face of $40/barrel oil prices except for the fact that they want a low oil price.