Mine posted here
It's not like there isn't some history to consider here.
The Saudi's have tried already... twice in my estimation... to put American shale out of business. But it is very widely agreed that the last time the Saud's opened the spigots that was their direct purpose. The effort failed... but likely would have worked, too... if not for the suddenly greater availability of loan facilities that enabled the frackers to reschedule debts and extend their planning time horizons from months to years... The time functions of the facilities that were made available helped to remove short term drivers of equity funding.
OPEC is an intentional monopoly... and it is driven by a core who coordinate and intend to exploit that monopoly power... which pre-dates fracking, of course... the first oil shock of 1973 also being tied to OPEC's agreed intent to use oil as a weapon, not just coordinate to support prices. Every time the effort in coordination struggles... as it always does when market demand slacks off and the producers cheat to sustain or grow market share... some will declare it to be the death of OPEC... which is nonsense. Then came the rise of Russia as a producer... a non-OPEC producer... enabled and supported by the west as a counterpoint to dependence on OPEC... but that also introduced new challenges, because Russia's ($, oil and power) interests in the middle east are in direct conflict with both the west's, and OPEC members, as you can see in Syria today. The wars ongoing in the region... hot and cold... are about ownership or control of the oil and gas fields... but just as much about control of the real estate in those nations that are the most obvious routes for oil and gas pipelines. Russia wants to make Europe dependent on Russian oil, not OPEC's... so they can do to Europe with oil what they''ve already done to extort Ukraine by shutting off access to energy there. The Russians want OPEC like control of Europe's energy. So, Russia has been fomenting unrest everywhere there might be a competing pipeline built to allow OPEC (or former Soviet Republic) oil to flow to Europe... to ensure the only pipeline that are completed are ones that work because of Russian protection and control.
The U.S. just succeeded in shutting down the pipeline project Russia was planning to use to accomplish that... only right before they finished it... only after letting them sink massive piles of Russian money into it. And, the U.S. has disrupted Russian designs for control over European gas by accelerating the development of LNG terminals, and changing rules to make fracked gas available to Europe. That's already been driving European energy prices down to near parity with world prices... even while the Europeans stubbornly refuse to accept the gift being handed them by refusing to build the terminals to receive the gas... that would ensure their diversity in sourcing. The lower prices... are driven by Russia... trying to prevent it working.
Look at charts for successful pure play frackers and you'll see they've survived a couple of "Perils of Pauline" type market situations already... when it wasn't at all clear that any of them would survive. Where you see big down drafts occurring... yes, they tend to overlap with "interesting" periods in the market... which doesn't mean the influences apparent are a demonstration of "free market functions" ? That's just the players in this game using the tilt of the field to advantage their inputs... so you will tend to see oil shocks occur every time the economy tips toward a demand deficit... The timing isn't an accident.
What's different this time... is that Saudi Arabia and Russia are working together to impose that impact... while trying to posture like the market imbroglio is a result of a "war" between them rather than a result of cooperation... which was absent the last time the Saudi's tried to do this on their own...
Chart for NOG gives a good picture of the timing element... with the prior downdrafts clearly indicated...
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