With non-OPEC producers like the U.S. churning out record amounts of oil, Saudi Arabia, the world’s largest exporter, has decided to lower its oil prices until it drives U.S. producers out of business.
The leader in this effort is Ali Naimi, Saudi Arabia’s Minister of Petroleum. The task of destroying U.S. oil production is easy for Naimi and Saudi Arabia. Saudi Arabia has the lowest cost of oil production in the world, somewhere around $2.00 per barrel, for below the lowest cost of U.S. shale oil, which is around $10.00.
The mathematics is easy. If the price of crude slips even close to $10.00 per barrel or even below $30.00, the U.S. is out of business, while Saudi Arabia will be raking in a profit of at least four-hundred to five-hundred percent gross profit.
“His biggest move was the latest one of defending Saudi market share, and abandoning the OPEC swing role,” said Mohammad al-Sabban, a former adviser to Mr. Naimi.
Naimi’s move to destroy U.S. oil production was over the objections of other strong-willed OPEC ministers at last November’s meeting of OPEC, which ended in a shouting match.
Naimi has also garnered criticism both from within OPEC and outside of it.
Unfortunately, there is every reason to believe that Naimi’s abandonment of Saudi Arabia and OPEC’s role as a guardian of high oil prices will destroy U.S. oil production.
Naimi’s actions go beyond killing U.S. oil production; it helps ISIS, which is financed by the Sunnis of Saudi Arabia to defeat the Shiites of Syria.
According to a recent New York Times article, Saudi Arabia, an ISIS That Has Made It, Saudi Arabia is not only the major backer of ISIS, it is the founder of ISIS. This is common knowledge in the Middle East. President Obama somehow includes Saudi Arabia and other gulf states in his 65-country coalition, even though he knows that ISIS will not fight ISIS.
Naimi was born in Saudi Arabia, just as oil was discovered there. He got his start in the oil business when he became an errand boy at Aramco at the age of 12 in 1947. Thanks to Aramco, Naimi studied in the U.S. and then rejoined the company, marching quickly through the ranks of what became known as Saudi Aramco. He became president in 1984 and chief executive officer in 1988. He was named oil minister in 1995 by Fahd bin Abdulaziz Al Saud. I knew Naimi when I worked for Aramco in the late ’70s. Then, he was a small, quiet, mild-mannered fellow. Naimi and I even had a class together at Aramco, where he pointed out to me that even though Saudi sheep look like goats, they are actually sheep.
To me, Naimi seemed like a nice guy – then.
The author, John Harding, lived and worked in Saudi Arabia for nine years.