Saudi Arabia and crude oil
After Mohammad Bin Salman Al-Saud’s, Saudi Arabia’s deputy crown prince, interview on April 1, investors have turned bearish on crude oil. During the last two trading sessions, US (SPY)(QQQ) crude oil has lost about 6.8%. Since mid-2014, Saudi Arabia was one of the major factors behind the fall in crude oil prices. The following graph shows how Saudi Arabia impacted the crude oil market.
Why Saudi Arabia is making crude so volatile
In the last two years, Saudi Arabia hammered crude oil prices at critical levels. During mid-2014, US crude oil prices (USO)(UCO)(UWTI) started to decline from the closing price of $107.26. In January 2016, due to the geopolitical turmoil between Saudi Arabia and Iran, crude reached a multiyear low.
Saudi Arabia’s economy depends on oil. Saudi Arabia isn’t concerned about the higher crude prices because crude prices aren’t as important as its market share. In any case, if it loses its market share to Iran and other oil exporting economies, it could be a question mark for its regional dominance in the Middle East.