Saudis, Russia, shale. That is all ye need to know in order to understand the oil market. The Saudis lead the OPEC oil cartel, Russia is their largest potential fellow traveler, and the Permian Basin in the Southwest is the oil-rich shale that stands between the other two and $100 per barrel oil.

There was a time when the Saudi-led cartel of 13 oil producers could more or less control the price of oil. If the market got so high as to encourage the development of alternatives to oil, the Saudis would open the taps and increase production to bring prices down. If prices fell to unacceptable levels, Saudi Arabia and its partners would agree to production cutbacks, and stabilize or boost prices. Russia would or would not cooperate, depending on its need for cash.