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Saudi Arabia more or less managed to market its oil around the $25-a-barrel level for as long as it could. The big event of 2004 is that the oil market called Saudi Arabia's bluff. They couldn't deliver the spare capacity they said they had. It turns out they have spare capacity, but it is in heavy oil, not light oil, which is easy to refine and doesn't have much sulphur in it. It's also known as "light sweet" crude, and it produces more gasoline and more heating oil. So 2004 was the year in which the world production of light oil peaked. There are no big fields of light oil producing now that can produce more. Saudi Arabia has heavy oil to sell, but they have to discount it much more. If Saudi Arabia could have produced more light oil, they would have.
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