Saudi Arabia is signaling a shift in its oil market approach, telling allies and industry insiders that it will not support further supply cuts and is prepared to withstand a period of lower oil prices. This marks a potential departure from its recent strategy of maintaining higher prices through production limits as a leading OPEC+ member.
The kingdom’s new stance follows frustration over some OPEC+ countries, notably Kazakhstan and Iraq, exceeding agreed output targets. Previously, Saudi Arabia pushed for strict adherence to quotas, but is now indicating readiness to tolerate lower prices, even if it means adjusting government spending and delaying major projects.
According to insiders, Saudi officials have communicated that the country can manage reduced oil revenue by increasing borrowing and cutting costs. However, analysts note that with a budget reliant on oil prices above $90 a barrel, the kingdom may need to scale back some initiatives if prices stay low.
OPEC+ is currently holding back over 5 million barrels per day, with Saudi Arabia responsible for a significant portion of these cuts. Looking ahead, the group may consider increasing output more rapidly, although Russia, the second-largest OPEC+ exporter, prefers a slower pace due to its own budget constraints.
Several factors may be driving Saudi Arabia’s change in strategy, including dissatisfaction with quota violations within OPEC+, competition from non-OPEC producers, and potential geopolitical considerations. While some see the move as a way to regain market share, others view it as a measured adjustment rather than the start of a price war.
Despite the planned increases, OPEC+ will still be limiting output into 2026, aiming for a gradual return to higher production levels. The situation remains dynamic as market players watch for further signals from key producers.