The clash between Russia and Saudi Arabia over an oil price strategy appears to pit the two nations against each other in a vicious battle for market share, but analysts say they are really at war with the U.S. oil industry.

Intentional or not, the open price war has sucker punched the U.S. oil industry with a massive decline in oil prices. The downturn could damage the U.S. economy, and knock the U.S. from its position as the world’s largest oil producer.

Tensions between Saudi Arabia and Russia have been rising since Russia failed to agree to deepen an existing production cut of 1.8 million barrels a day in response to a sharp decline in demand. The drop in demand was caused by the fall-off in travel worldwide, and the quarantine of millions of people due to the coronavirus.

A global market share war could result in another 10% or more decline in prices. That could be a huge body blow to the U.S. oil sector, with companies that are cash-strapped facing sharper cutbacks and even bankruptcies and forced mergers.

Source: CNBC