The changes come at a difficult time for the Saudi kingdom, which is still adjusting to last year's leadership transition while also facing pressure from regional rivals like Iran.

With no growth and no profits, the US exploration and production industry is facing a gruelling year. The gap between strong and weak companies is likely to widen. Those that have lower-cost production and healthier balance sheets should be able to stay in business. Those that have good assets but big debts may have to sell their most valuable properties. Those that have neither attractive assets nor strong finances will be heading for bankruptcy.

West Texas Intermediate (WTI) and Brent, two of the major crude oil benchmarks, account for about 69% of the weighting in the S&P GSCI Energy index. As a result, the energy index tends to follow major price movements in the crude oil market. With sustained, high crude oil production from countries like Saudi Arabia, Iraq, the United States, and Russia, global liquid fuel inventories rose significantly in 2015, resulting in crude oil prices falling to 11-year lows in December.

Global benchmark Brent crude prices fell 23 cents to $36.99 a barrel at 0910 GMT. U.S. West Texas Intermediate (WTI) crude slipped 7 cents to $36.69 a barrel.

The Dow Jones Industrial Average slipped 117.11 points, or 0.7%, to 17603.87. The S&P 500 fell 0.7% and the Nasdaq Composite lost 0.8%.

“The 800-lb. gorilla in the room, and by that I mean Saudi Arabia, showed it’s power,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “They are on a mission to squeeze out the high-priced producers and aren’t done yet. Things could get very ugly in the second and third quarters for countries like Venezuela and Nigeria and for U.S. exploration companies.”

In July 2014, at the height of the Crimean Crisis, Ukraine imported gas from Western Europe, and particularly from Germany for $370 per 1,000 cubic metres. Earlier in the 2014, the country had paid $273 per million cubic metres for gas from Russia.

The immediate outlook for oil prices remains bleak, with some analysts like Goldman Sachs saying prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.

The latest Reuters survey of 31 analysts showed an average price forecast for Brent for next year at $57.95 a barrel, more than $20 above current prompt market values.

"Our estimate for next year is around $40 per barrel when estimating budget revenues. At $40 per barrel there is an understanding about how to act. Measures and proposals have been prepared."