1986 Oil Price Collapse
After years of cutting production to defend prices, Saudi Arabia abandoned its role as 'swing producer' and flooded the market. Brent fell from $30 to $10 per barrel in six months. Saudi oil minister Sheikh Yamani declared OPEC would fight for market share.
Soviet Union's oil revenues collapsed, contributing to its eventual dissolution. U.S. and North Sea producers faced widespread bankruptcies.
Established the modern pattern of OPEC market-share battles followed by production coordination. Oil-exporting nations learned their economies remained dangerously dependent on crude prices.
The 1986 episode shows what happens when a dominant producer decides low prices are preferable to shrinking market share. Current OPEC+ cuts cannot continue indefinitely if non-OPEC supply keeps growing—at some point, the cartel faces the same choice Saudi Arabia faced in 1985.
