“Saudi Arabia is the only one in the position of putting more oil on the market when they want to and cutting production when they want to,” said Edward Chow, a senior fellow at the Center for Strategic & International Studies in Washington. “Consumers win, producers lose.”

And

?While cheaper crude erodes Saudi Arabia’s income, too, the country has enough reserves and credit to withstand the slump, Chow said. The kingdom needs $83.60 a barrel to balance its budget, and the central bank has $734.7 billion in reserve assets, the International Monetary Fund said. The Saudis ran deficits from the mid-1980s until the late 1990s and may be prepared to do so again, according to Chow. Brent traded at $82.96 as of 12:58 p.m. in London.

Eoin Treacy's view

Saudi Arabia is currently flexing its muscles in the oil market in an attempt to secure market share and to chasten competitors. For higher cost producers such as Iran or Venezuela this is a potential problem. The last few years have given plenty of examples where despotic regimes have been overthrown as a result of an inability to improve social conditions. Lower oil prices represent a potentially damaging problem for these countries. 

For India on the other hand, the falling price of oil represents a benefit for the administration which still pays a hefty oil subsidy to contain prices. The Nifty is currently unwinding a short-term overextension relative to the 200-day MA and has been less volatile than other stock markets over the last month. 

West Texas Intermediate crude found at least short-term support today in the region of the psychological $80 area, posting an upside key day reversal. Upside follow through tomorrow would enhance potential for an additional short covering rally and unwind of the deep short-term oversold condition. 

Brent crude’s decline also paused today but it did not rally to the same extent as WTI.