Bloomberg: Saudi Arabia Defies The Kremlin
- 5.06.2025, 7:55
Oil flows will intensify, undermining the Russian budget.
The global oil market is undergoing tectonic shifts, and Saudi Arabia is driving these changes. The kingdom is pushing for a further accelerated increase in oil production by OPEC+ countries in the coming months.
According to Bloomberg .
Riyadh's strategy is already causing serious friction with Moscow and threatens to further undermine Russia's oil revenues. Saudi Arabia, whose dominance within OPEC+ has been steadily growing, wants the group to add at least 411,000 bpd in August and possibly September.
Insiders indicate that Riyadh wants to capitalize on peak demand in the summer. The Organization of the Petroleum Exporting Countries and its allies have already agreed to increase production by 411,000 bpd in May, June and July.
But the group reportedly disagreed on the way forward at its last meeting. Russia led the faction that pushed for a pause in production increases to assess the impact of decisions already taken.
Nevertheless, Saudi Arabia's view ultimately prevailed. After years of Riyadh holding down oil prices, the current sequence of supply increases marks a radical strategic shift. The kingdom is now actively seeking to drive down the cost of crude.
Reminder, Brent crude fell to a four-year low in April, dipping below $60 a barrel in London, as OPEC+ stunned the market for the first time with a production increase three times higher than planned. On Wednesday, futures were trading around $65 a barrel.
It was initially reported that Saudi Arabia aimed to "punish" participants exceeding quotas with low prices. However, sources now indicate that Riyadh's main motivation was to regain lost market share. It is for this reason that the kingdom sees no reason to slow down, contrary to suggestions from Russia, Algeria and Oman.
This policy shift, while offering relief to consumers and helping central banks fight inflation, poses serious financial risks for oil-producing countries.
Russian government oil revenues fell to their lowest level in nearly two years in May after a sharp drop in commodity prices. Differences of opinion between Moscow and Riyadh - the two most influential members of the cartel - will come to the fore again on July 6, when OPEC+ meets to discuss production levels for August.
The outcome of this meeting could finally determine the vector of movement of global oil prices and seriously affect the fiscal stability of key global players, in particular Russia.