Oil as a weapon

[dan_s]

Good stuff. I agree with Don that Saudi Arabia is really not worried about the U.S. shale plays. The most optimistic projections that I've seen is that U.S. tight oil production (thanks to horizontal drilling and fracking) goes up another 2-3 million bbls per day by the end of this decade and then goes on steady decline. Be clear: The U.S. will NEVER be a net exporter of oil. In fact, we will NEVER even get close.

Don's view that this move by Saudi Arabia is all about trying to hurt Iran and Russia makes a lot more sense.

The good news for us is that it is already working and six months should be more than enough time to crush the Russian economy and force Iran to reconsider their nuclear ambitions.

This is also killing a lot of other OPEC members, so an emergency OPEC meeting in Q1 would not surprise me.

His comments that this is HUGE economic stimulus for the global economy are also true. In addition to the immediate impact for consumers of lower fuel prices, we should soon see lower grocery prices.