It’s every country for itself, or so it seems after a meeting between OPEC and other major producers ended in acrimony on Friday, which has the market now worried about a price war between some of the biggest oil producers in the world.
Russia and Saudi Arabia are likely to significantly hike their respective outputs after this month’s conclusion of a global pact between the Organization of the Petroleum Exporting Countries and the other largest oil producers, including Russia, according to recent reports.
Over the weekend, Saudi Arabia, the de facto leader of OPEC by dint of the scale of its production and its ability to easily ramp up oil production, is said to be planning to boost crude-oil production to between 10 million and 11 million barrels per day, according to Reuters, citing two people familiar with talks.
Saudi Arabia is capable of producing 12 million barrels a day at full tilt.
Riyadh in the past few days reduced its so-called official selling price — the announced price set to buyers that is usually pegged to some other benchmark — for all grades of crude, according to Reuters. Russia’s oil minister has said that it also will increase output.
The moves come after plans by OPEC and allies, a group known as OPEC+, to stabilize oil prices at a series of meetings in Vienna last week ended in bitter dissent, with Russia rejecting a plan for additional output cuts and sending prices for the commodity plummeting to their lowest levels in roughly three years.
The collapse of the negotiations helped to lead West Texas Intermediate oil CLJ20, -29.62% , the U.S. benchmark, to notch its worst weekly drop since 2014 and its lowest settlement since August 2016.
May Brent crude