Is Saudi Arabia the real reason behind the rise in oil prices?

Given the past four months of a steady uptrend in oil prices one would think it certainly validates Saudi Arabia's decision to flood the market with cheap oil which in turn brought about huge price declines that discouraged US shale gas producers from competing on OPEC's turf. The coverage has been phenomenal when considering the infighting we've seen come out of the collusive oil body over memberships agreement or rather lack of cohesion in participating in a production freeze.

Iran's standoff with the de facto leader of OPEC has created the impression that tensions between the two nations might be reaching a boiling point that could spew over into the stability of supply in oil after Tehran has been taunting Riyadh with a series of threats focused on closing a strategic canal, Strait of Hormuz, in retaliation to any attacks on its sovereignty by the US and its allies.

The rife has largely taken attention away from those members, namely Venezuela and Nigeria, who've suffered economic distress as the result of low oil prices but are subsequently making their way back into news headlines as the disturbing outlook of their economies start to show the effects of being starved of oil revenues.

Saudi Arabia's oil strategy is finally paying off https://t.co/aonJUcJAC4pic.twitter.com/nRJUawTlh3

— Bloomberg (@business) May 27, 2016

Nigeria's government has been facing attacks from terrorist militants who are aggrieved by the presence of multinational oil corporations in a specific region as well as the independence of the Niger Delta. A group calling themselves the Niger Delta Avengers have tormented oil firms for a while with the latest act of sabotage of blowing up the main electricity supply point to a facility owned by Chevron serving as a commitment of more attacks to come if their demands aren't met.

This attack is just one of many that has plagued the oil-rich African nation with further worry to stress over as the losses incurred from an abnormally low oil price begins to break the back of the Central Bank of Nigeria's foreign currency reserves. The attacks have resulted in the country's oil production hitting a 20 year low which aren't healthy signs for a nation that's reliant on oil to fund its trade balance.

Although a small size of the overall oil market, the drop in output from this tense situation has given oil bulls impetus to stretch the rally further with renewed confidence that the supply glut that held back the oil price for many a months is starting to wane.

Niger Delta militant attack shuts down Chevron facility: company source #Nigeria https://t.co/tOyp8dOHlK pic.twitter.com/Pd5Gg8eeT5

— Reuters Africa (@ReutersAfrica) May 26, 2016

But even more so with evidence showing that the US shale gas industry might be on a brink of collapse. This wouldn't be the first time that speculation over the financial position of these alternate forms of energy companies has been so high with the fractiousness relationship between Saudi Arabia and the other members of OPEC overshadowing the bleak outlook.

In desperation to save themselves and the industry, US shale gas producers decided to offload its surplus production into the Liquified Natural Gas market with its targeted market being Japan and China who are the biggest consumers of the product.

However the move has only led to further despair with the prices of LNG decoupling from Brent Crude with analysts saying that the industry is about to plunge deeper into trouble with the market showing signs of contraction following the economic downturn in both Japan and China.

Spot #LNG price stays weak, breaks link to rising #crude, likely to boost industry tension. https://t.co/2jleTt4ETg pic.twitter.com/OOZ9aAEVsd

— Clyde Russell (@ClydeCommods) May 26, 2016

These outcomes all support the price of oil in the near term but nothing stops shale gas producers from re-entering the oil market now that prices have hiked sufficient enough to warrant it. Going into OPEC's bi-annual meeting next week, Saudi Arabia may feel confident in projecting that its won the price war yet it hasn't.

Shale gas producers may be fading away but the ones that get left behind are proving that they are ready and able to survive such a market by adapting their products to new avenues of tapping sales highlighting the degree of product flexibility.

This will inevitably remain the thorn of the side of OPEC and more important Saudi who's mission to remove competition from the oil market is looking tougher than what it expected.