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Riyadh - By abandoning the tight rein it held for decades on the oil market, OPEC heavyweight Saudi Arabia launched a battle for control that sent crude prices plummeting.
It has been a painful fight, experts say, but with its vast resources the Gulf Kingdom is showing no signs of giving up.
The huge drop in oil prices since mid-2014, from more than $110 a barrel to around $30, followed a decision by the Saudi-influenced Organisation of the Petroleum Exporting Countries (OPEC) not to cut output as it had in the past to keep prices high.
The move came as traditional suppliers like Saudi Arabia were facing increasing pressure from new market players, in particular US shale producers, and aimed to squeeze them out.
It also sought to put pressure on non-OPEC member Russia - the biggest global oil producer - and to force a trimming of output by fellow OPEC member Iran, Riyadh's regional political rival.
As the freefall in prices has continued, calls have grown on Riyadh and its Gulf Arab neighbours to reconsider.
With the market awash in crude, even the chairman of state-owned oil giant Saudi Aramco has said prices have reached "irrational" levels.
But still Riyadh has given no indication of wavering.
"The Saudis are well aware that if they cut production, it will not greatly impact prices because their cut will be replaced by other producers like Iran, Iraq, Russia," said oil expert Jean-Francois Seznec at Georgetown University.
'Protecting market share'
"The Saudis want producers to suffer enough to agree to a negotiated cut across the board," Seznec told AFP.
Saudi Arabia, the world's second-biggest oil producer and largest exporter, spent tens of billions of dollars in the past two decades to raise its crude production capacity to 12.5 million barrels per day.
It became the only producer with spare capacity, allowing it to raise and lower production to influence the market.
The kingdom boasts the world's second-largest crude reserves, at 268 billion barrels, and sits on the fifth-largest natural gas deposits, at 8.5 trillion cubic meters.
At less than $10 a barrel, its production cost is also the second cheapest in the world, according to Rystad Energy, a private consultancy.
"Saudi Arabia's main goal is achieving stability in the oil market and protecting its market share," Kuwaiti oil expert Kamel al-Harami said.
"The kingdom could not let high-cost producers compete in its own markets," Harami told AFP.
Saudi Arabia and its Gulf peers in OPEC also have huge fiscal cushions to cope with low oil prices, accumulated in the years when oil prices were high.
So while Saudi Arabia's oil revenues have plunged, leading to a record $98bn budget deficit for 2015, the kingdom can still count on more than $600bn in reserves.
"There is no wish to cut production when you have costs lower than the others and ultimately you can resist longer than the others," Patrick Pouyanne, the CEO of French oil giant Total, told AFP during the recent World Economic Forum in Davos.
Producers 'cannot bleed forever'
"We have scale... We have technologies that have allowed us to maintain our low cost," Aramco chairman Khalid al-Falih said at the Global Competitiveness Forum in Riyadh this week.
"That is going to be even sharper in a more low-price environment," he said, adding that the company's investments had not slowed down despite the price fall.
In a report on Monday, Jadwa Investment in Riyadh said Saudi Arabia remains the only country with spare production capacity, leaving it "well equipped to hold off any attempts of encroachment on its market share".
So far, Harami said, the battle is not yet won.
"Shale oil has proven to be much more resilient than they had initially expected," he said.
But a Western diplomat based in Riyadh said the Saudi oil policy reflects a more assertive attitude under the new King Salman, who took power a year ago, and is unlikely to be abandoned.
The kingdom will "defend its interests internally and externally" whether that pleases outsiders or not, the diplomat told AFP, speaking on condition of anonymity.
And Seznec said he expects the strategy to start yielding results in the near future.
"I think sooner rather than later there will be an arrangement with non-OPEC producers, who cannot continue to bleed forever," the analyst said.
