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[lundu]

Snewguy,

I'm unable to make any sense of this oil market so perhaps you can explain some things to me.  First off, I realize that the world price of oil is determined by overall supply and demand.  But prior to the massive drop in the oil price over the past year, America did not export any of its oil (by law) onto the world market as far as I'm aware.  And I don't know whether Saudi oil even got to America's market because the US used Canadian oil or Mexican or other South American nations' oil and perhaps some from Nigeria.  Therefore the US may not have actually been in direct competition with US oil.  Obviously, if there were too much overall production the price would go down but I would think that the Saudi's market share would increase or decrease depending upon the output of many other countries, but not the US so much as their oil stayed in the US. Now I realize that the increase in oil production due to American fracking did increase overall production but even if the fracking was mostly closed down, wouldn't the US get more oil from Canada or South America, places thar are closer to the US market.  So how do the Saudi's gain market share?  Which markets?  And above and beyond all this, if the world economy heads into a recession, in part because of the drastic decrease in oil prices, wouldn't the demand for oil decrease ans hence the Saudi's would perhaps have a larger share of shrinking demand?  How is that a win for the Saudi's?  And lastly, considering the above, how does selling maybe 20% more of your oil at prices that are between 70% and 80% less make any economic sense?  I just don't get it.  Fracking will not go away forever, this new technology will not disappear.  I think the Saudi's made a mistake.  But correct me if I'm wrong.


Lundu