Saudi Arabia, Kuwait, the United Arab Emirates and Qatar are leading a fierce battle to protect OPEC’s global market share by forcing others, like U.S. shale producers and Russia’s state energy giants, to live with lower prices.
Years of $100 a barrel oil allowed the four exporters to amass reserves of $2.4 trillion, according to the Sovereign Wealth Fund Institute, a huge war chest for countries with a combined population of fewer than 50 million people.
They also used the windfall revenues to invest in infrastructure that gives them new weapons in the oil market fight.
The UAE, for example, has built a state of the art oil export hub in Fujairah. The Indian Ocean port can now compete with rivals such as Rotterdam and Singapore.
Fujairah, one of seven emirates making up the UAE, also spent more than $3 billion to build a pipeline to carry crude oil from Abu Dhabi’s oil fields to the port, by-passing the strategic Strait of Hormuz between Oman and Iran.
Millions of barrels per week are loaded in Fujairah onto tankers bound for markets in Asia.
“Fujairah is sending the products of the Gulf countries to the east whether it is going directly to China or a trans-shipment to Singapore,” said Siavash Alishahpour, managing director of oil terminal operator VTTI.
Saudi Arabia’s veteran oil minister Ali al-Naimi led the charge at the OPEC meeting back in November to keep pumping in the face of falling prices. That decision accelerated the price collapse, as it became clear the Saudis were playing a long game.
“We’re not going to cut production, certainly Saudi Arabia is not going to cut,” Ali al-Naimi told CNN in December. Asked if that position would hold for the first half of 2015, he bluntly stated, “No, it’s the position that will hold forever.”