The crash in oil prices is fanning the flames of revolt against Saudi Arabia inside the walls of OPEC.
A war of words has broken out between OPEC kingpin Saudi Arabia and disgruntled smaller oil producers like Venezuela and Algeria. The smaller countries want the cartel to hit the brakes on production to help lift depressed oil prices — and their own struggling economies.
As the leading oil producer, the Saudis hold enormous sway over the oil cartel. Their long term bet is that by keeping oil prices low, they will squeeze American shale oil producers out of the game. That way, the Saudis can again regain market share lost to the U.S.
Just 10 years ago, Saudi Arabia was the world’s largest oil producing nation, churning out nearly twice as much crude oil as the U.S. But American output has skyrocketed in recent years thanks to the shale revolution, which has completely reshaped the global energy equation. Today the U.S. produces nearly as much as Saudi Arabia.
The onslaught of U.S. oil has sent prices spiraling from over $100 a barrel in mid-2014 to around $40 a barrel currently.