Light sweet crude ended the week continuing the plunge from its June highs, trading below $54 (£34.75).
Commentators chime in with the usual explanations, that it comes down to mixed factors of supply and demand. Some stress the former (including shale supplies) and others the latter (weak global demand).
The reality might be simpler.
The Americans and the Saudis cooked up a supposedly “secret” deal to keep the oil price down on September 11 when Secretary of State John Kerry met King Abdullah.
The cat is now well out of the bag and the theory has attracted widespread media speculation.
This blog is no fan of conspiracy theories, but this solution is too neat to ignore, providing substantial benefits for both parties.
Saudi Arabia is determined to contain the Shiite states of both Iran and Bashar al-Assad’s Syria and a plunging oil price kills two birds with one stone. The twin goals are to force Iran to limit its nuclear program, while pressuring Russia to stop supporting al-Assad in Syria.
According to the IMF, Iran needs oil at $130 a barrel to balance its budget and Russia needs it at $98.
The Saudis meanwhile need it at $84 a barrel, although since they are sitting on $735bn in foreign reserves, their own treasury can afford some pain.
Naturally, the kingdom publicly denies any private Mickey Mouse with Americans and, on 22 December at an energy conference in Abu Dhabi, Saudi minister Ali al-Naimi blamed the price fall on lack of OPEC coordination, speculators and misleading information, trotting out the standard excuses.
More telling, he also warned his country might even increase production, adding to supply, if new clients were forthcoming.
It is certainly plausible that the Saudis would like to lock in share in Asia.
It is more probable that geopolitics are guiding the strategy, just as in the 1980s Ronald Reagan’s Saudi connivance helped derail the oil-dependent USSR.
Any current existing deal would carry implications for the both the commodity and energy company shares. So if the parties mean business, the price of crude will likely stay contained for many months to come.