Why oil prices are falling

Saudi Arabia was long known as the Godfather of oil. That was not because they had the largest reserves of oil or the lowest cost of production. The Saudis were feared in oil markets because they alone held excess production capacity, making them the swing producer. If supply was threatened, only Saudi Arabia could swiftly replace lost production. The oil cartel, OPEC, was similarly kept in line by the standing Saudi threat to deploy excess capacity to flood the market with supply. For decades, Saudi Arabia was the largest and most important oil producer in the world. That is no...

Saudi Arabia was long known as the Godfather of oil. That was not because they had the largest reserves of oil or the lowest cost of production. The Saudis were feared in oil markets because they alone held excess production capacity, making them the swing producer.

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