As Saudi Arabia continues to ramp up production, taking market share away from U.S. shale producers, U.S. shale is being forced to cut back. This story has been told many times over the past few months, but the data is finally confirming the success of Saudi Arabia's strategy, albeit a minor one thus far.
This new oil price drop simply is crushing producers' currencies in foreign exchange markets. The combination of the petrodollar losing its ability to act as a store of value, combined now with exchange rate blues, may be the straw that breaks the producer "camel's back" in respect to OPEC and dollar denomination. Such a moment would seem ripe for Russia and Iran to begin a gradual challenge to Saudi's leadership of the OPEC cartel and to the dollar-denominated energy system, if enough OPEC members and other producers are prepared to rebel. Iran has been lobbying hard in this direction.