The market can no longer ignore the elephant in the room: Oil is going down. WTI crude reached its lowest level since August 2011 on Tuesday, which left many investors wondering, "What is going on?"
Jim Cramer smelled a big, fat, floppy oil fish. Could it really be just the Saudis stirring the pot or is there more to this story behind the scenes?
"Believe me it's not just the Saudis' decision to cut prices that is causing oil to go down. The Saudis don't export enough to us … to destroy our booming domestic drilling industry," said the "Mad Money" host.
Cramer added that there is a perfect storm of issues happening. First, there is the weakening global economy. The world outside of the U.S. is weakening, which means oil is getting cheaper as well. Additionally, the U.S. is still importing oil.
In the long term, the Saudis can flood the market to reduce drilling, but they wouldn't be able to dump as much oil into the U.S. if global economies were stronger and able to use more oil.
To top it off, oil is priced in U.S. dollars. That makes oil more expensive for the world as our currency gains strength. Europe isn't exactly getting a deal on oil if the Euro is weakening.