The duopoly of Russia and Saudi Arabia is the main controlling force for crude oil prices globally. Strict coordination between these two nations has driven up oil prices sharply in the past 25 months, with prices rising from $29.42 in January 2016 to over $60 as of January 2018.
These two nations have limited output to avoid prices dipping too low – something Iran and Iraq regularly allowed to happen – but now the prices are starting to rise they offer two threats. The first is that rival oil suppliers become the go-to for buyers, and the second is that these high prices effectively shut out developing nations, which in turn drives demand down.
Saudi Arabia has the cheapest running costs for oil, at around $4 a barrel, so high or low they can’t lose in the market, but Russia can, and the predictions for 2018 point at an increase perhaps reaching $80 per barrel – a level unseen since November 2014.