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Oil wars Saudi Arabia has said that it will not support further cuts in oil production and is prepared for a prolonged period of low prices. At first glance, this seems illogical, as lower prices mean lower profits. But, as in 2014 , this is a strategic move, where the refusal to cut production led to a collapse in prices and bankruptcies among US shale producers, allowing the Saudis to retain market share. Today, the situation is repeating itself. Shale production in the U.S. is in the recovery stage, and the Saudis are once again seeking to displace more expensive competitors. After all, the break-even level for shale producers is $59-70 per barrel, while the Saudis' is much lower. When prices fall, the US industry is the first to come under pressure.
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At the same time, Trump announced secondary sanctions against countries that continue to buy Iranian oil. The main consumer is China (91%), which is already subject to high tariffs and restrictions, so the direct effect of such sanctions on the PRC will definitely not have a direct effect, because trade relations are already spoiled. But the threat of sanctions could complicate oil deals by making insurance, logistics and settlement more difficult, potentially reducing supply volumes and supporting prices. Thus, both Saudi Arabia's actions and the US statement should be seen as an attempt to influence the oil market. One is trying to do it through physical supply, the other through sanctions pressure. In both cases, the countries want to protect the interests of their producers.
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