With discoveries of oil in the Middle East in the 1930s and with Standard Oil offshoots deeply involved, the Arabian American Oil Company--Aramco--was created in Saudi Arabia in 1944. In the 1970s, the Saudi government began acquiring more and more of a stake in Aramco, taking over full control in 1980 of what is now called Saudi Aramco.
The Organization of the Petroleum Exporting Countries--OPEC--was formed in 1960 to "coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry."
Saudi Arabia is the key partner in the 12-nation OPEC cartel because it has the world's largest proven crude oil reserves at more than 260 billion barrels.
OPEC sets production targets for its member countries and its method for lowering the price of petroleum is by keeping production high.
So the price of a barrel of oil is less than half of what it was as recently as midway last year.
As Alan Greenspan, former chairman of the Federal Reserve, has explained: "At the root of the price collapse was the development in the U.S. of technologies for extracting tight oil, mostly from shale deposits, by horizontal drilling and hydraulic fracturing. This reversed the decline in U.S. oil production."
"After the oil embargo of the 1970s," Greenspan said, "OPEC wrested oil pricing power from the U.S." But now, there's been a "shale technology breakthrough."
"As a result, the gap between global production and consumption has widened, precipitating a rise in U.S. and world inventories, and a fall in prices. Saudi Arabia, confronted with an oil supply glut but not wishing to lose market share, abandoned its leadership role as global swing producer and refused to cut production to support prices."
Says Jamie Webster, an oil market analyst at HIS Energy in Washington, D.C.: "The faster you bring the price down, the quicker you will have a response from U.S. [fracking] production--that is the expectation and the hope. I cannot recall a time when several [OPEC] members were actively pushing the price down in both word and deed."
There are other factors, too.
The descending price of oil has severely impacted on Russia causing some analysts to see collusion between the U.S. and Saudi Arabia to hurt the Putin regime in Russia--and some have extended this to seeing such a conspiracy also being aimed at major oil producers Iran and Venezuela, too.
Russian President Vladimir Putin himself has raised this prospect declaring: "We all see the lowering of the oil price. There's lots of talk about what's causing it. Could it be the agreement between the U.S. and Saudi Arabia to punish Iran and affect the economies of Russia and Venezuela? It could."
Martin Katusa, chief energy investment strategist at Casey Research in Vermont, says, "It's a three-way oil war between OPEC, Russia and North American shale." http://www.globalresearch.ca/who-is-behind-the-oil-war-and-how-low-will-the-price-of-crude-go-in-2015/5422544
Is a Saudi Arabian assault on the clean-energy movement a factor, too?
"Now energy experts are seeing evidence that the oil bust is helping Saudi Arabia achieve another long-term goal: undermining global efforts to reduce dependence on fossil fuels," wrote Joby Warrick who has covered energy and environmental issues for The Washington Post.
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