reduces the resources of an an oil-financed Islamic state
How about Saudi Arabia's own oil-financed islamic state resources? Do they need a minimum price to keep their country running, or will they just use their financial reserves to fill the gap, or will they sell extra oil because of the lower price, so there won't be much of a gap?
If we are just talking about financial resources, and not the influence of extreme political pressure from places like the US, the Saudis are quite capable of maintaining the current situation for a long time. The biggest issue is that their revenues with these low prices are below their government expenditures. But they have a sovereign wealth fund sufficient in size to make up the difference for several years. They still make large profits per barrel as their production costs are certainly no more than $20 per barrel. But this situation will not last several years.
They cannot really sell more oil than they are as they are not ramping up production but refusing to cut production. Their free market argument is perfectly sound. They are the low cost producers so the high cost producers (i.e. the US fracking industry, the Canadian tar sands producers, North Sea oil, deep water oil, Arctic oil) should be the ones to cut production. And so the Saudis are running them out of business.
That is until the pain in the US exceeds the military and strategic benefit to our empire and we exert enough pressure on them to change their production levels. Can we do that still? Probably, but there will be consequences.
Saudi sees big benefits in their policy as it also works to gain them strategic advantage over their biggest enemy the Shiites - Iran being the only big country dominated by Shiites. They do not really care about Russia other than their military support for the Syrians (Shiites again). The Russians are certainly a large competitor in the oil markets and a fairly low cost producer but they are not a problem like the fracking and tar sands people are.
A big problem going forward for the Saudi's is Sunni fundamentalism. ISIS is, in a round about way, a child of Saudi/Wahabbi Sunni extremism as it is an outgrowth of Al Queada. Al Queada is, of course, the more famous child of the same. There is a strong movement in Saudi to support and fund Sunni extremism. Al Queada would not exist without it anywhere near the levels it does today. ISIS will seek to expand into Saudi as they think of themselves as the proper and rightful caretakers of the holy cities as they consider the Royal family totally corrupt. One sees the parallels to this situation in the US where extreme conservatives look on conservative/moderate Republicans as no different than liberals. Holding this situation in check will require some pretty serious repression in the Kingdom - as always there will be consequences and an unknown resolution. In the meantime the Shiites will not sit idly by letting this situation worsen for them. There is great potential for spreading troubles throughout the Sunni controlled countries due to Shia influenced resistance.
All the non-market stuff will also be a big determinant in how the levels of production are set and when.
I expect that the Saudi's will hold out long enough to gut their US and Canadian competitors (and a few other bystanders) as this will not take all that long (no more than 6 months). Beyond that it will be interesting to see how the various possibilities work themselves out. I note that some of the prognosticators (BP for instance) have totally switched their tune and have gone from the prediction that oil will jump back up in price later this year to saying that oil prices will stay down for several years now. But I think the real answer to that will be determined by whether we have our likely global financial meltdown we seem to be hanging on the verge of. Or not.
None of this will be helpful in dealing with climate change in any case. It is just more BAU stuff. Interesting and entertaining, but fluff in any real sense.
All of the machinations of the market players and the various empire builders will just make it much harder to accomplish any solutions to our big problem. Ever day our options dwindle.