The Kingdom’s return to its old role didn’t happen by accident. It has been part of a plan that dates back to September 2016, when rising oil output by American frackers began crashing oil prices.
As we wrote back then, Saudi Arabia devised a plan to confuse oil traders and investors.
That’s the impression one would get by listening to Saudi Arabia’s new oil minister back then. He was talking oil markets up one day, down the next day, and up the day after.
That kind of talk is part of a broader game Saudi Arabia played to master the oil market. It’s a game that started back in the 1970s when the Kingdom succeeded America as the world’s largest oil producer.
And it played it in different ways. Sometimes as a “swing” producer, satisfying occasional gaps opened up by production shortfalls by major oil producers to stabilize the oil prices.
That’s what happened in the 1970s. The Kingdom filled the gap created by the decline in US oil production; the 1978-80 gaps created by the Iranian revolution; and the 1990-1 gaps opened up by the Iraq-Kuwait war.
Source: Forbes