Saudi Arabia to raise production to maximum levels, escalating oil market battle

hopefully we will see prices drop a bit... and corporations won't keep all the profits...

I don't Saudi Arabia understands US shale producers, and I don't think the Saudis will succeed in the near term. I don't think they fully appreciate just how long it will take them to meaningfully affect US oil production.

Saudi Arabia is an autocratic top down government with a bunch of lucky-sperm drones of the royal family welding absolute power. Saudi Aramco has a monopoly on Saudi oil production. That's their mindset in this "oil market battle".

But there isn't a US shale oil monopoly or oligopoly that can respond rationally to this "escalation". Instead, there are dozens of medium size oil companies in North America, and hundreds of smaller ones. It's a highly fragmented industry. They're all in competition with each other to acquire and develop the best oil and gas properties.

All those companies have CEOs that are well compensated, both in cash and in stock. The CEOs have all reached the pinnacles of their long careers. They like getting paid for drilling holes in the ground. The companies all have directors that are well paid to show up to a few board meetings a year.

Are these shale oil producers all going to decide to fold their hands against Saudi Arabia? Are they going to dissolve their companies, shut them down, walk away? Hell no!

With current low interest rates, many of even the most indebted shale producers have been able to roll over their obligations to 2020 and beyond. And even if a company fails, there will always be another that will quickly pick up the assets at a bargain price.

In the long run, US shale oil production will slowly decline as depletion exceeds investment. And various expensive "conventional" oil developments run by the US majors and the multinational oil companies will be delayed or cancelled. But that will take many years.

Things could stay "interesting" in the oil patch for quite some time.