We can thank Saudi Arabia for much of the 52 percent drop in oil prices since late June, according to Richard Fisher, president of the Dallas Federal Reserve.
"The Saudis have engineered" the move, he said in a speech this week, CNNMoney
Saudi Arabia led OPEC to reject production cuts, and the nation has offered price reductions to its customers.
Presumably the Saudis are trying to drive high-cost suppliers, such as U.S. shale oil producers out of business.
"We are a huge supplier of energy. The Saudis took a while to realize what was going on," Fisher said, referring to the growth of U.S. output, which has hit its highest level in at least 31 years.
Low oil prices also cause pain for Iran, Saudi Arabia's hated neighbor, he noted.
Given Saudi Arabia's policy, Fisher doesn't expect oil prices to rebound back to $100 anytime soon.
"From a budget stand point, [the Saudis] have reserves that can handle this," he said.
While U.S. oil prices have rebounded from last month's 5 ½-year low of $43 a barrel. Tom Kloza, co-founder of Oil Price Information Service, doesn't think the plunge is over. U.S. crude could fall below $40 in the second quarter, he told CNBC
"I think the cycle has a long way to run out," Kloza said. While oil bulls have pointed to a decline in rig counts during recent weeks, he is unconvinced.
"It's still about oil shale, and the rig count is very misleading," Kloza noted. He explained that there are about 500,000 wells in this country producing less than 15 barrels a day.
"We're going to fill up in storage, and it doesn't appear that there's any way around that. Some of the additional crude oil from the water will come to the United States simply because we have the facilities to store it."
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