Shafaq News/ Saudi Arabia, the world's largest oil exporter, has signaled a shift in its energy policy, abandoning its unofficial target of $100 per barrel, a report by the Washington Institute said on Friday. The move, according to sources familiar with the matter, marks a departure from the kingdom's previous strategy of maintaining high oil prices to fund ambitious economic development plans.
The kingdom is instead planning to gradually increase its monthly production, adding a total of 1 million barrels per day by December 2025. This decision comes as oil prices have been on a downward trajectory, with Brent crude trading below $70 per barrel.
While the policy shift could weaken oil prices further, Saudi Arabia appears to have alternative funding options for its infrastructure projects, such as its foreign exchange reserves and sovereign debt issuance. However, other oil-producing countries, particularly those facing sanctions or economic challenges, may find it more difficult to adjust to lower oil prices.
The Saudi decision could also reignite tensions with other oil producers, including Russia, which has been struggling with economic sanctions and declining oil revenues. The two countries previously engaged in a price war in 2020, leading to a sharp drop in oil prices.
The International Energy Agency has predicted a surplus in global oil capacity by 2028, which could further pressure oil prices. The US, a major oil consumer, is likely to be impacted by lower prices but may be able to absorb the impact in the short term, according to the report.