Saudi Arabia has kept to its word and cut oil output by 486,000 barrels per day as part of the OPEC agreement made in October 2016. The agreement has helped oil prices to stabilise at over $50 per barrel. Fracking for tight oil (also known as shale oil or light tight oil) has entirely changed the economics underlying the entire global oil market. OPEC knows that it must watch American fracking production closely to keep oil prices competitive. Saudi Arabia’s output cuts are just the beginning of a trend that is expected to last for months, possibly years to come, irrespective of the rise of American fracking. OPEC learned a lesson that it must be competitive on price with American fracking - which has demonstrated survival at very low prices. Moreover, leaders of Riyadh (the capital and most populous city of Saudi Arabia) don’t want to upset the new Washington administration by going to war on American frackers. Riyadh has a plan to sell shares of state-owned company Aramco to the public. The Aramco IPO will help finance its vision 2030, to make the Saudi economy less dependent on oil.