But a prolonged price collapse would add to financial pressure on highly indebted American oil companies, dozens of which have gone out of business in recent years, with a decline in American oil production likely to follow. Oil companies have been laying off workers in Texas and other oil producing states.
Canadian oil sands development, already lagging because of environmental concerns and costs, stands to be hit hard by a price war. And developing countries that depend on oil, like Nigeria, Angola and Brazil, may suffer significant economic slowdowns.
The first big impact was felt by Saudi Arabia itself. Shares of Saudi Aramco, the Saudi national oil company, plummeted by more than 9 percent on Sunday, falling below its December initial public offering price of 32 riyals for the first time.
The Riyadh stock exchange fell more than 8 percent. On the Kuwaiti exchange, trading on a major index was halted after it tumbled 10 percent.
As they cut prices, Saudi officials are now preparing to ramp up the kingdom’s oil output to compensate for the lost revenue caused by lower prices. China, the biggest oil importer, has historically bought oil at cheap prices to stockpile for future use when prices rise.
Low oil prices, now about $34 a barrel for Brent crude, the international benchmark, and about $31 for West Texas Intermediate, the U.S. marker, could also stoke public discontent with governments, including Saudi Arabia’s, as falling revenues mean less money for social and other programs used by governments to bolster support.
Saudi Arabia is the world’s largest oil exporter and has been producing about 9.7 million barrels a day, well under its roughly 12 million-barrel-a-day capacity.