Why Saudi Arabia Allows the Price of Oil to Drop

Schlumberger Limited put together some statistics on why Saudi Arabia is not worried about the price of oil. It's not just to harm emerging shale operators or to keep rivals like Iran at bay, it's that Saudi can produce oil much more cheaply. Saudi Arabia "doesn't need a high oil price to justify the drilling costs needed to maintain or grow its production. This is due to the fact Saudi Arabia only needed to drill 399 new wells last year just to keep its daily production at 11.4 million barrels of oil. That's a simply jaw-dropping number when we compare it to its two closest rivals”, Russia and the U.S. In 2014 Russia drilled 8,688 wells and the U.S. 35,699 wells compared to Saudi Arabia to maintain production. In the U.S. it costs an average of $8 million to drill and complete one shale well. It cost Saudi only $3 billion to drill all 399 wells.