Fed’s Fisher Says Saudi Arabia Engineered Oil Price Drop

Saudi Arabia is largely responsible for the dramatic fall in oil and gas prices in recent months, a U.S. government official said.

Richard Fisher, the head of the Dallas Federal Reserve, said “the Saudis have engineered” the oil crisis. He was speaking Wednesday at the Economic Club of New York.

“We are a huge supplier of energy. The Saudis took a while to realize what was going on,” Fisher said, referring to the massive growth of the U.S. oil industry in recent years.

Fisher is the most prominent U.S. official to pin the blame largely on Saudi Arabia.

As recently as July, oil traded at over $100 a barrel. By January, it had plunged below $50.
Saudi officials have repeatedly blamed supply and demand for the price meltdown. They say they were caught off guard by the price decline, and acknowledge this is putting a lot of pressure on U.S. shale.

“Although Saudi Arabia and OPEC countries did not engineer the reduction in the price of oil, there’s a positive side effect, whereby at a certain price, we will see how many shale oil production companies run out of business,” Prince Alwaleed bin Talal, a member of the Saudi royal family and prominent global investor, said in January.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza