Saudi Oil Production Cut: Political or Economic?

And the Fallout?

At the outset, let me be clear. Historically, Saudi oil output/pricing decisions have been political as well as economic — most dramatically in 1973 with the Arab oil embargo and throughout the years to the present. The king has traditionally steered all major decisions, largely based on political considerations, something that I experienced first-hand when King Fahd overruled a commitment of his foreign minister, Saud Al-Faisal, to me to cooperate with Iran on oil policy within OPEC. Why such political considerations? For…