Saudi knife in Putin's back

They have been aiming for a market price of $100 per barrel to balance the kingdom's budget and fund the prince's mega-projects, such as building a huge city and acquiring new players for the sheikhs' harem, all while promoting the 2030 FIFA World Cup. 

This is partly why OPEC imposed oil production restrictions to keep prices high, which also benefited Russia, for whom a high oil price is crucial. 

However, it seems the Saudis are fed up. Problems with China's economy diminish hopes for expensive oil, and the budget needs financing. If commodity prices don't rise, they might simply sell more of it. Now, they are starting to fight for market share.

The Saudis and other OPEC members have been unhappy to see their market share fall in recent years, especially as the United States became the largest oil producer. Consequently, money has not been flowing into their pockets. 

This is what we have been waiting for a long time, as it could sharply push down oil prices and, therefore, Russian income. The price of oil dropped by 2% on this news alone, despite China announcing a range of economic incentives this week that should have pushed oil prices up. Yet it didn’t.

And this is just an article. Saudi Arabia has not yet increased its oil production, but it will almost inevitably do so, reminding Putin and co of the sweet '80s. Other countries will have to change their strategies next because whoever is last is at a disadvantage. If this process begins, it will be difficult to stop. Saudi Arabia has decided to start it, possibly because it is not afraid of price competition due to its very low production costs.

Additionally, Saudi Arabia has just joined BRICS, where each member prioritizes its own interests—especially financial ones. It appears the Arabs have concluded that to increase their wealth, they need to diminish Putin's. It's nothing personal; it's just business.

Source

About the author. Serhii Fursa, investment expert, blogger.

The editors do not always share the opinions expressed by the blog authors.