However, the Saudis have as much as 1 million barrels a day in excess capacity. Thus, Cramer added that Saudi Arabia could directly offset the production decline of the U.S.
Iran can produce approximately 600,000 more barrels per day by year end. That quantity could tip the scales and send oil on the decline again. However, the International Energy Agency anticipates that consumption will increase by 1.2 million additional barrels per day in 2016.
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Thus, with the U.S. cutting production by 1 million barrels, Saudis increasing production by 1 million barrels, Iranians increasing production by 600,000, and demand going up by 1.2 million — that leaves the world short 600,000 barrels a day.
"Hence why the price of crude wasn't totally annihilated today even though there was no production freeze out of Doha weekend, something that was never going to happen anyway," Cramer said.
Cramer added that he thinks Saudi Arabia has three goals: First, to keep Iran from increasing production too fast by discouraging higher pricing. Second, it wants to prevent the U.S. from producing so much oil that it loses market share.
The third goal is to generate enough money to fund both national expenses and a war against Yemen. If oil falls too much, Saudi Arabia won't have enough cash.
"We have equilibrium right here in the high $30s, low $40s. As the year goes on it is possible that we could get tightened supply because U.S. production drops off even more at these prices," Cramer said.
Cramer dismissed the idea that oil could go lower from its current level, because that would assume that Saudi Arabia does not care about its own budget, and it does.
"All of this talk about a production freeze was just that, talk. The Saudis — not the U.S., not Russia, not Iran — control the price of oil. They like it right here," Cramer said.
Ultimately, Saudi Arabia has chosen the price of oil, and it likes the current levels. So, get used to these prices, Cramer warned. They are mandated by the only country on earth with enough capacity.