Saudi Arabia, the leading member of the OPEC+ alliance, has warned that global oil prices could drop to $50 per barrel if member countries fail to honor their agreed production cuts.
Saudi Energy Minister Abdulaziz bin Salman delivered this message during a recent OPEC+ conference call, cautioning producers like Iraq and Kazakhstan, which have been exceeding their quotas.
The warning signals Saudi Arabia’s frustration with overproduction and hints at a possible price war if members continue to ignore the agreement.
Saudi Arabia has been cutting its own oil production by an additional 1 million barrels per day for over a year, keeping its output around 9 million barrels per day.
However, other countries like Iraq, Kazakhstan, and Russia have been failing to comply with their quotas, adding excess supply to the market and keeping oil prices low.
The last time Saudi Arabia waged a price war was in early 2020 during the pandemic, when it competed with Russia for market share amid falling demand.
Saudi Arabia is reportedly ready to endure short-term revenue losses to reclaim market share, shifting away from its previous target of maintaining oil prices around $100 per barrel.
The ongoing overproduction has led to a market oversupply, preventing prices from rising significantly, even as demand remains sluggish.
Business Day