= 27d567bc2d48d9f40e9ccc20ea370b15)
RichardKennaway comments on Open thread, Jan. 18 - Jan. 24, 2016 - Less Wrong
You are viewing a comment permalink. View the original post to see all comments and the full post content.
= 783df68a0f980790206b9ea87794c5b6)
Loading…= b715d02e85f7b3b4ae65ca3d3e450868)
Subscribe to RSS Feed
Powered by Reddit
= f037147d6e6c911a85753b9abdedda8d)
You are viewing a comment permalink. View the original post to see all comments and the full post content.
Comments (201)
Saudi Arabia flooded the market in order to reduce the price, in order to combat the benefit to Iran of the raising of sanctions.
Their oil production didn't rise that much. They didn't really flood the market. They mainly decided not to cut their production.
And there is a good reason for this decision. Saudi Arabia tried cutting production in the '80s to lift prices, and it was disastrous for them. Here's a blog post with nice graphs showing what happened ...
Understanding Saudi Oil Policy: The Lessons of ‘79
That's one argument. Another common argument is that they want to increase their market share and kill the US tight oil industry.
That's a strange move. Right now the last thing oil producers need is even lower prices.
You're assuming they are maximizing money. That is not so.
Consider that Saudi Arabia and Iran are on the opposing side of Islam sects, so the reason was to stump the sudden economic growth of their enemy.
Yes, it's centuries that people kill each over who was the correct successor of Muhammad, his cousin or his friend. Welcome to planet Earth...
I get that. But by cutting their own lifeblood? On what basis do Saudi strategists estimate that the damage to the Saudi economy will be small enough compared to the damage to the Iranian one?