An official of the US Federal Reserve has accused Saudi Arabia of engineering the global oil price crisis to hurt its regional rival Iran.
Speaking at the Economic Club of New York on Wednesday, Richard Fisher, the head of the Dallas Federal Reserve, said that "the Saudis have engineered" the oil crisis.
Fisher said Riyadh benefits both economically and politically from the oil price decline.
He said Saudi Arabia is able to handle the sharp drop for a much longer period as its reserves are far larger than Iran’s.
"I'm sure King Abdullah thought to himself, 'I've also done a favor vis-a-vis Iran,'" Fisher told reporters. “From a budget stand point, [the Saudis] have reserves that can handle this.”
In July last year, oil traded at over $100 a barrel, but by January this year, the price of a barrel dropped below $50.
Fisher predicted that oil prices would not return to around $100 per barrel any time soon.
According to reports, Riyadh is determined to keep prices low and force shale oil producers out of business.
The booming US shale oil industry is under threat after Saudi Arabia convinced fellow members from the Organization of Petroleum Exporting Countries (OPEC) to maintain current oil output.
The high-cost of producing and extracting liquid oil from shale oil deposits is becoming uneconomic following a sharp drop in oil prices after OPEC’s decision not to cut oil production, experts say.
Saudi Arabia's Oil Minister Ali al-Naimi reportedly told fellow OPEC members at a meeting recently in Vienna that they must tackle the US shale oil boom by lowering prices and undermining the profitability of US and Canadian oil producers.