The global price of oil was once manipulated - more or less - by the United States and Saudi Arabia. The US was interested in a price not too high, the Saudis in a price not too low.
The rising production of fossil fuel including oil is a portent of US self- sufficiency in energy; the forecasts differ substantially as the timing is concerned with a consensus saying 2025 to 2030, but some expect the self-sufficiency happening even earlier. In 2020 the US will have displaced Saudi Arabia as the world's biggest oil producer. US dependency on petroleum imports from the Gulf has fallen dramatically, close to 20 percent in 2012; Saudi Arabia accounted for 13 percent of total imports in 2012.
A high oil price benefits the United States, at least in the short run, with access to lower energy prices enhancing competitiveness vis-à-vis China, Japan and Europe. How much is open to dispute. Hydraulic fracking is reaching a stage where production costs goes up, requiring a high oil price to be profitable. Considering the high investments in this technology and subsequently in infrastructure, the last thing the United States wants is a fall in oil price pulling the carpet out from under the feet of this technology. On top of that is the lure of future US exports of petroleum products restricted since 1973. Keeping the oil within the US depresses energy prices, benefitting the economy, but in the longer run, it is difficult to see growing production of fossil fuel including oil while still maintaining restrictions on exports. The temptation will become too big to resist. As one of few large buyers and sellers at the same time, the United States will likely want to pursue its own interests and not link up with other producers including other Western producers.
All this is precisely the opposite of what Saudi Arabia wants.
If the oil price stays high, not only will hydraulic fracking continue to be profitable in the United States, but a number of other countries around the world may start using the technology. The European Union is considering whether to allow fracking and, if so, under which conditions to prevent negative effects on the environment. With a higher the oil price, marginal producers are more likely to enter the arena, undermining Saudi Arabia's position. If the US starts to export crude oil for the global market, it will be a major new player politically and economically, and could make the existing institutional structures like OPEC obsolete, edging the Saudis away from the center of oil diplomacy.
Common interest in the oil price underpinning a US- Saudi understanding is no longer in place; on the contrary, a conflict of interest is apparent.
Seen from the outside, the Saudis have tried to communicate their displeasure to the US, maybe trying to wring another kind of understanding out of the wreckage. This was done explicitly and publicly in October 2013 by Saudi Arabia's former spy chief and ambassador to the United States, Prince Turki al-Faisal, at the annual Arab-US Policymakers Conference.
The signals ran into a US stone wall. Unless gaps in policies and perceptions are bridged, prospects for future stability of the Middle East do not look good.
