Saudi’s ‘Fuel War’ with USA is over: Saudi Crown Prince

Saudi Petroleum Minister

Riyadh 24th June (News agency) – Saudi Arabia’s Petroleum Minister Khalid Al Falih has announced that the fuel war between Saudi Arabia and USA is over. Falih added that in future, Saudi Arabia will focus on balancing the crude demand and supply. Simultaneously he claimed that in this war, Saudi Arabia had emerged the winner. However, it was alleged that even though Saudi has claimed that this war was against the USA, the real targets were Iran and Russia and that the ‘fuel war’ had the complete backing from USA.Saudi’s 'Fuel War' with USA is overIn June 2014, USA had decided to increase its petroleum production to 40 lakh barrels per day. As a reaction to this, Saudi too had increased its production and started a fuel war. As a consequence, the average crude prices which were $100/barrel between 2011 and 2014 had collapsed. In March 2015, the crude prices had dropped to as low as $27/barrel as a result of which the economies of oil producing countries had come in trouble. Both Iran and Russia had cautioned that this fuel war would cost Saudi dearly.  However Saudi Arabia did not reverse its decision to increase production.


Saudi’s 'Fuel War' with USAAgainst this background, Falih’s announcement that the fuel war with the US is over is significant. Even though Saudis have claimed a victory in this war, looking at the slide of the economy, observers feel that Saudi has gained very little in the process. Falih has announced that in future Saudi will focus on balancing the demand and supply. And therefore it is felt that current prices which are around $50/per barrel may increase in future. Falih has expressed his confidence that once the excess supply in the market is over the crude prices will stabilize based on demand and balanced supplies. And therefore it is possible that the crude market may once again become active and buoyant. This decision will have global implications and economies pressurised by falling crude prices may get back on track. Simultaneously however, crude importing economies may be affected adversely.

Iran and Russia have been alleging that to teach a lesson to crude producing countries like Russia and Iran, USA, Saudi and other gulf countries had intentionally started a fuel war. Despite frequent appeals, Saudi has declined and refused to reduce the output and had in the process attracted the displeasure of both Iran and Russia. The politics in the Gulf was said to be behind this. However this left economy of Saudi Arabia severely affected and the Saudi authorities seem to be now facing internal challenges from within the country.



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