| | | It's much simpler than that.
Saudi Arabia can restrict production as it sees fit without any significant impact on its development or it's finances. And any restriction of its supply pushes the price of oil up. But it's not doing so. In fact, it is content to allow the price of oil to fall, thereby cutting its revenues, and the question is why.
Because the US is a better ally to SA than it is to Israel, for obvious reasons, to wit:
Fracking only works with a relatively high price of oil, which the US government wants to keep down in order to punish Russia, whose state-sponsored crims are hacking away at institutions like JPM. And the threat to stuff which is vital, I.e, the Fed, Treasury, Defense, etc., is real. This is why SA is not restraining it's production which would otherwise be in its self-interest. The US has promised SA assistance in case ISIS gets out of hand, but in exchange it cannot intervene in the US's plan to punish Russia by keeping the price of oil down.
Punishing Putin is sufficiently important to the US that the USG is willing to sacrifice XOM's business in the Russian Arctic, no mean sacrifice. And it's even willing to temporarily put the hurt on the domestic fracking business to achieve this.
Putin can hack away all he wants, but electronic networks can be and will be secured. Can he single handedly keep the price of oil up with the US promising to protect SA like it did when Saddam got out of hand? Not likely. If he cuts Russian supply enough to affect the price of oil, he'll be cutting off his nose to spite his face.
Putin overreached, he's screwed.
In other words, it's all about Russia for reasons you and I don't know but I suspect have to do with hacking, for which the Russian state-sponsored crims have a real talent. |
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