Home Industry Energy Saudi Arabia ditches $100 crude target to win back market share Oil prices are down nearly 5 per cent so far this year, amid increasing supply from other producers, especially the US by Reuters September 27, 2024 Image credit: Maya Siddiqui/ Getty Images Saudi Arabia is preparing to abandon its unofficial $100 a barrel oil price target as it gets ready to raise output to win back market share, even if it means lower prices, the Financial Times reported on Thursday. The Organization of the Petroleum Exporting Countries (OPEC), which is de facto led by Riyadh, has been cutting oil output to support prices along with allies including Russia, who are together known as OPEC+. However, prices are down nearly 5 per cent so far this year, amid increasing supply from other producers, especially the US, as well as weak demand growth in China. Earlier this month, OPEC+ agreed to delay a planned oil output increase for October and November after crude prices hit their lowest in nine months, saying it could further pause or reverse the hikes if needed. The FT, citing people familiar with the matter, reported that Saudi Arabia is committed to the group raising production as planned on December 1, even if that means a longer period of low oil prices. Global crude benchmark Brent was down about 1.7 per cent to $72.25 at 1031 GMT following the FT report. The Saudi government’s communications office did not immediately return a request for comment. The market share of OPEC+, formed in late 2016, has slipped to all-time lows after output cuts since 2022 and supply increases by the US and other producers, according to the International Energy Agency. OPEC+ oil output is equal to 48 per cent of world supply, according to Reuters calculations based on IEA figures. Saudi Arabia’s crude output is below 10 per cent of the world market, while US oil output has risen to 20 per cent of world supply. Saudi Arabia has decided that it will not continue to cede market share and believes it has enough funding options, including foreign reserves and debt, to withstand a period of lower prices, the FT said. The kingdom, the world’s top oil exporter, has shouldered a large share of OPEC+ output cuts, reducing its output by about 2 million barrels per day (bpd) since late 2022. OPEC+ members are currently cutting output by 5.86 million bpd, equivalent to about 5.7 per cent of global oil demand. Saudi Arabia has increased production in the past to defend its market share and, in 2020, engaged in a price war with Russia. Both flooded world markets with oil after Moscow refused to support OPEC’s decision to make deeper output cuts to deal with the fallout from the COVID-19 pandemic. Riyadh blocked calls by some OPEC members to make output cuts in 2014 to halt a slide in oil prices, setting the stage for a battle for market share between OPEC and non-OPEC producers amid a boom in US shale production. OPEC and Saudi Arabia have repeatedly said they do not target a certain oil price and make decisions based on market fundamentals to balance supply and demand. Read: Oil prices slide on prospect of Saudi Arabia raising output Tags Brent China Crude energy OPEC Saudi Arabia You might also like TAQA prices $1.75bn dual-tranche bond offering, includes green bond Saudia, Delta Air Lines team up to expand global network OPEC+ panel sticks to output policy, doubles down on compliance OPEC+ doing ‘noble’ job of balancing oil market, says UAE