Saudi Arabia is considering a bold move in the oil market. If OPEC does not agree to cut current supply volumes, the kingdom may flood the global market with additional oil, potentially reducing prices to $50 per barrel.

Potential Increase in Oil Supply

Reports suggest that Saudi Arabia may start boosting oil supply as early as December. This decision could significantly impact the market unless OPEC countries support the idea of reducing volumes. According to sources, the kingdom plans to increase its monthly oil production by 83,000 barrels per day, raising total output to 1 million barrels per day by the end of 2025.

Russia's Oil Dependency

Russia's economy is heavily reliant on oil revenues, and such a move by Saudi Arabia could deal a severe blow. Russia has already begun exceeding its daily oil production quota in July. Under Western sanctions, such as the price cap on Russian oil, the country faces new challenges. Russian Finance Minister Anton Siluanov has stated intentions to reduce the economy's dependency on oil and gas revenues to 23% by 2027.

Global Economic Implications

Economists warn that Saudi Arabia's actions could trigger a new 'price war' in the oil market, similar to the situation observed in 2020. Saudi Arabia hopes to withstand such a period through secondary sources of government revenue, while retaining the goal of maintaining prices at $100 per barrel for a balanced budget.

Saudi Arabia's potential increase in oil supply could significantly alter the global oil market, posing risks to OPEC and economies heavily reliant on oil revenues, such as Russia. The impact of these events could reflect on global economic stability.