As the price of oil plummets to a five-year low, Saudi Arabia – owner of the world’s largest proven crude reserves – is behaving with almost preternatural calm. So much so that Prince Alwaleed bin Talal Al Saud, the kingdom’s highest-profile investor, a few weeks ago professed himself astonished by official complacency in the face of this “catastrophe” – and that was when the price was still above $90 a barrel.
Now, there are doubtless technical reasons why the Saudis remain sanguine as the price dips well below $70, and the kingdom’s oil technocracy has been prodigal in providing them. This is no different, they say, from any other commodities cycle, in which the market sets prices. The main Saudi concern is to protect market share. If there is any “politics” involved here, analysts add, it is an attempt to force US shale producers with higher production costs out of the market.
It is true, as the Saudis protest, that neither they nor Opec as a whole can set the price. But do they protest too much, as they do nothing to arrest the speed of falling prices? It is not just that the oil producers’ cartel, where Saudi Arabia still rules the roost, declined to cut output at last month’s meeting. As recently as September the Saudis were actually increasing supply to a glutting market.