Saudi Arabia Shifts Oil Strategy Amid Market Pressures

Saudi Arabia is reassessing its oil production strategy, considering increased output even at the expense of lower prices, to reclaim market share. Despite previously supporting cuts to stabilize prices, the kingdom now aims to bolster its position amid shifting global dynamics and competitive pressures from other producers.

Saudi Arabia is preparing to abandon its unofficial oil price target of $100 a barrel as it gears up to increase output to reclaim market share, potentially leading to lower prices, the Financial Times reported on Thursday, citing insiders.

OPEC, led by Riyadh and allied with countries including Russia, has been cutting oil output to support prices. However, prices are down nearly 6% this year due to rising supply from other producers, notably the United States, and weak demand growth in China.

Earlier this month, OPEC+ delayed a planned oil output increase for October and November after crude prices hit a nine-month low. The group remains committed to increasing production as planned on Dec. 1, potentially extending the period of low prices, the Financial Times noted. Brent crude fell about 2.6% to $71.57 following the report.

The Saudi government did not immediately respond to a request for comment. The kingdom has decided not to continue ceding market share to other producers, relying on foreign reserves and debt to manage lower prices, according to the Financial Times. Saudi Arabia, the world's top oil exporter, has reduced its output by approximately 2 million barrels per day since late 2022.

OPEC+ members are currently cutting output by a total of 5.86 million bpd, equivalent to about 5.7% of global demand. Historically, Saudi Arabia has increased production to protect its market share, as seen in 2020's price war with Russia and its 2014 stance during the U.S. shale boom.

OPEC and Saudi Arabia consistently state they do not target specific oil prices, making decisions based on market fundamentals and aiming to balance supply and demand.

(With inputs from agencies.)