The role of Saudi Arabia, he main OPEC oil exporter, in leading the low price strategy. Lowering the oil price helps the friendly countries, and hits the Saudi competitors.
The price of oil has now gone down, a rare event, and seems to be staying there. Starting from the fifties in the past century it never stopped increasing , pushed by the Organisation of the Oil Producers , and more recently , by the so called "futures oil market". Now, the price of oil has moved down, as the main producer of OPEC works to enlarge its market and its area of influence.
The first people to talk about a lower price of oil were the American producers of non conventional oil and gas, who were thinking to export great volumes of both gas and oil worldwide . The main crude oil exporter of OPEC, Saudi Arabia, was apparently not worried by such a novelty. The Saudi objected that the idea required a high level of production which would quickly exhaust the existing reserves; moreover, they considered that such a bonanza would be used to reduce the heavy imports of oil into the USA rather than for exports; and that the new gas would be useful to the US chemical industry, which would create jobs , and increase exports.
The great gas export did not yet materialise for the lack of export structures, as the gas has to be transported as a liquid, and the oil could not be exported, as it is forbidden by law. The idea of a lower price of oil coming from the extra American production petered out , and the market went back to the usual talk about an increase of the crude oil price, due to serious turmoil in the Middle East , and high crude demand in the East and Far Est. However, the best analysts of the oil scene started being worried that the high price of oil was having an effect on the demand first in Europe, but also in the USA.
Renewables were getting very popular, and a consumer lost may be impossible to get back. So, the price was kept fairly stable , and , after a while, Saudi Arabia started offering discounts to good clients, the USA, China, and other countries in the East and Far East, where oil demand keeps increasing. Europe is not particularly interesting to the big exporter, as crude oil demand stagnates there, and it's actually declining, Europe being committed to reduce carbon emissions.
The main OPEC oil exporter, Saudi Arabia, took seriously the lead in this low price strategy. Following their habit of operating quietly, the Saudi did not take an explicit position on the oil market: what they did was to offer discounts to some clients in the USA and in the Far East. The crude oil market took immediately the lead, the oil price fell, and it is still lower than before.
The moment was in fact well chosen. There is a war in the Middle East , with the extremists of the ISIS trying to keep the area they have already conquered in Syria and in Iraq , where they produce some relatively small sources of crude oil and sell clandestinely , at prices negotiated for cash . Apparently, the ISIS relies a lot on the crude oil clandestine sales for money to buy weapons, and to train the new fighters, which seem to be quite abundant. A lower price might cancel the advantage offered by the black market, and might reduce the money available to the ISIS.
Presently ISIS is under the menace from the sky by planes from the US and other members of the coalition set up by the USA, which includes Saudi Arabia. This seems to be a new position for that country. Few years ago , the decision of the USA to start negotiating with Iran was seen by Saudi Arabia as a radical change of the American foreign policy, and the country reacted by refusing the position in the key ONU Committee offered to them.
Saudi Arabia is the main country of strict Sunni religion, while Syria and Iraq are Shea or similar , and its authority , and its resources are quite relevant. The fact that Saudi Arabia is now a member of the group that sustain the bombing of the ISIS army , and may also have has some activity of its own, especially as the war still goes on in Syria , reinforces strongly the anti ISIS position .
In any case, the Saudi strategy is not limited to the Middle East. Lowering the oil price helps the friendly countries, and hits the Saudi competitors. The low oil prices will affect the larger European exporter and competitor, like Russia , which might be hit by the low price of crude oil , and of natural gas,that Russia always tied to crude. If Russia comes to suffer a reduction of the money flowing from its export of gas and oi , it will have less resources to buy what they usually bought from Europe, cars, machinery , oil equipment, and fashion. The European exporters, and specially Germany, might suffer a decline of their best market. The European economy , on edge since a long time , is going to enjoy a bonus on the price of the oil they import , but will suffer a reduction of demand for their exports to Russia .
In any case , the Saudis might consider Europe as an area which wants to reduce to a minimum the imports of crude oil , and therefore cannot be considered a safe client , to be treated with special attitude. Prices. Of course , the lower price will affect all markets , including Europe , which will take advantage from the generalised lower price which will ,of course, touch all markets, although in different way. Europe will take advantage from the cheaper crude , but in the European market , and especially the Italian, the prices of gasoline and gasoil are loaded with a number of different impositions to support different causes, which do not change with the change of the price, so the advantage for the drivers will not reduce proportionally with the price , but much less. It is not yet success, although some gasoline buying has already started to increase.