An old-timer in the oil market and the US shale production pioneer called the policy of Saudi Arabia a serious mistake that would reportedly cost it as much as 1 trillion dollars. Oil billionaire Harold Hamm said the predatory pricing strategy of the kingdom would not work. The world’s leading oil producer increased its crude production and offered both new and loyal clients lower prices attempting to drive its high-cost rivals out of business. However, the implemented measures resulted in failure. Competitive producers joined the fight for their market share raising their own output which caused increasing (has exerted downward) pressure on oil prices. “The Saudis turned 1.8 million barrels on, and basically their intent was to drown us. But they’ve not got that done. It’s been a monumental mistake for them, I might add, a trillion-dollar mistake,” said Hamm, the founder and chief executive of Oklahoma-based Continental Resources Inc.
Continental Resources is known as a key player in the so-called shale revolution. It was the company which pioneered oil production in the Bakken shale region. Saudi Arabia’s policy was directed mainly against such enterprises. The development of shale formations turns inefficient amid the current dynamic in prices. Perhaps, Harold Hamm made that statement feeling resentment about his own 1-billion losses, which the shale giant owner incurred in 2015. Commodity experts forecast that as many as one third of American oil-and-gas producers could trip toward bankruptcy by 2017. Only an advance above the level of $50 a barrel can improve the scenario. Allowing for the latest forecasts, we can propose that Saudi Arabia’s strategy will finally turns out to be fruitful as its competitors are unlikely to keep up the current pace for the long term.
