New answers tagged

1

To kill off American competition. US shale-oil fields are very costly to run. So if the oil price falls below certain level, US oil producers are making a loss. If the low prices persist for long enough, some of them might be incited to call it quits and shut the whole thing down. OPEC was trying to keep prices reasonably high, making profit for everyone -...


-3

My answer challenges the status quo mindset in the West (Russia bad, US & West Europe good), so it might be a bit difficult to wrap your mind around it... Putin made his thesis on energy - he knows what role energy plays in both geopolitics and overall economically both internally (for Russia) and globally. While the neocons have surrounded Russia ...


2

There is a deal (still active till the end of March 2020) between the Organization of the Petroleum Exporting Countries (OPEC) and Russia. The deal assumes mutual cut of oil production in order to artificially lower the overall supply and keep the price high. The original deal has been initiated by Russia (despite it is not a member of OPEC) and signed back ...


7

Game theory point of view We can view it from the game theory point of view, with a simple prisoner's dilemma situation. Let's keep it simple with only two oil producers, Saudi Arabia and Russia. Both can either decrease production, or sell all they can. The less oil is sold, the more each barrel is sold for. The best situation if we add their revenues ...


16

The head of Rosneft, Igor Sechin, has long been convinced that the OPEC deal "plays into the hands of the United States" by making its shale oil industry profitable. Allegedly he finally managed to convince Putin to decline the deal in order to drive the US oil producers out of business.


7

One other point not mentioned is Syria. With Russia and its allies gaining the upper hand over Saudi supported forces, this could be considered an opening up an economic front in that conflict.


24

The reason Russia didn’t want to do a production cut is because the US is not participating in this, since the US is also not part of OPEC and actually leaves all the oil production to market forces and in the decisions of private businessmen rather than state-controlled oil like most of OPEC. While it's true that Russia needs a higher oil price for their ...


52

Disclaimer: I'm no expert, this answer is based on my modest understanding of the situation at play. The OPEC decision to cut oil production was meant to keep prices high: if every OPEC country were selling all the oil they could, it would drive prices down since there would be more supply than demand. So if every OPEC country agrees to sell only a limited ...


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