Saudis caught in their own game of keeping oil prices low

SAUDI Arabia has long enjoyed the status of being the top crude oil exporter in the world. With a record production of 10.57 million barrels per day in June 2015, the kingdom has been one of the major driving forces behind the current oil price slump.

Saudi Arabia has kept its production levels high since last year in order to drive other players (especially US shale drillers) out of business. Equally clear is the fact that this strategy of maintaining the glut and driving out rivals hasn't worked so far.

Even when we look at the refining sector, we see that Saudi Arabia has been following a similar strategy of flooding the markets with refined fuel. Riyadh has already sparked an oil price war with the Asian refiners downstream by offering close to 2.8 million barrels of low-sulphur diesel to the European and Asian markets. This has caused Asian refining margins to fall drastically, the effects of which can ironically now be seen on Saudi Arabia itself.