In a price war, what counts is your ability to dish out pain and withstand it. Unfortunately for those counting on a rapid rebound in oil prices, Saudi Arabia’s capacity looks ample on both fronts. Leaving aside geopolitical considerations, Saudi Arabia’s apparent unwillingness to cut production to shore up oil prices reflects rational market strategy. With triple-digit oil having unleashed the genies of shale and demand conservation, artificially supporting prices would simply curb demand and shrink Saudi Arabia’s market share further. Letting the price fall, while painful, at least plays to its key strength: low per-barrel production costs. For many oil-exporting countries, though, the more important price is the one it takes to cover swollen public budgets. In the wake of the Arab Spring, this isn’t just an economic consideration. So […]