The Globe and Mail reports in its Saturday edition that Saudi Arabia has lost the oil war. The Globe's Eric Reguly writes that the Saudis underestimated the strength and flexibility of the U.S. shale-oil industry, but also that of the financing machine behind it. American capitalism proved to be the superior fighting force. At last count, total U.S. oil production was about 9.2 million barrels a day, not much less than that of market leaders Russia and Saudi Arabia. Last year the Saudis decided not to rein in production or prop up prices. In mid-2014, oil was trading at $100 (U.S.) a barrel or higher. By the start of this year, it had fallen to $30 (U.S.). Saudi Arabia is running a 10-per-cent budget deficit, its economy is close to recession and, for the first time, it is selling bonds on the international market to shore up its finances. Its effort to shatter the U.S. shale-oil industry failed badly and, for that, it must overhaul its economy in a hurry if it is to avoid a downward financial spiral and perhaps social unrest. Only a few years ago, it was impossible to imagine that the cowboys running the American shale-oil drillers would bring the mighty Saudis to their knees.