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A pump jack operates in an oil field in the Permian Basin in Texas. A pump jack operates in an oil field in the Permian Basin in Texas, June 11, 2019 (Photo by Jacob Ford for Odessa American via AP Images).

How Increased U.S. Shale Oil Production Led to the Breakdown in Russia-Saudi Relations

Tuesday, March 24, 2020

Saudi Arabia’s decision to launch a price war in oil markets earlier this month could not have been more poorly timed, coming amid plummeting global demand for oil due to the COVID-19 pandemic. The Saudi announcement sunk oil prices to an 18-year low, near $20 per barrel, after five years at more than double that price, putting further downward pressure on already troubled financial markets.

Saudi Arabia had gambled that by flooding the market and pushing down prices, it could punish Russia for refusing to cut its output, while recouping market share that had been ceded to U.S. shale oil producers. But the risky move could do lasting damage to the global economy, to oil-dependent countries and to Riyadh’s budding partnership with Moscow. ...

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