Saudi Arabia’s strategy to keep production high despite declining oil price to push the high cost producers out of the market and force an automatic market-driven adjustment that seems to have worked. The strategy was also aimed to keep Saudi Arabia’s market share intact or increase it.

Since mid-2015, many shale producers in the United States have gone bust and US commercial crude oil production has declined by 1 million barrels per day to 8.42 million barrels per day. Due to lower oil price, there have been protests over workers’ pay in many countries such as Qatar, and Nigeria, which disrupted supplies. In addition to that economic hardship has led to production disruption in countries like Venezuela. These factors have led to OPEC becoming consumer’s first choice, leading to a global reliance on OPEC not seen since the 70’s, an era of the oil embargo. According to the data from International Energy Agency (IEA), OPEC now accounts for 34 percent of global oil output, just below 36 percent seen during the oil embargo.

Saudi Arabia after learning from its mistake in the 1985 era, when to check oil price it reduced production but ended up lowering its market share while oil kept sliding. However, their strategy, which wasn’t actually intended to help the Middle East is benefiting almost everyone in the gulf and possibly other low-cost producers as well.

Brent is currently trading at $46.1 per barrel.