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Russia won the oil war with Saudi Arabia




After Saudi Arabia unexpectedly announced at the monthly OPEC+ ministerial meeting that it would voluntarily cut 1 million barrels a day from its oil production, oil prices reached their highest point since February 2020. The production cut is the only real swing producer in the group. Its increase has far offset the increase in production given to Russia and Kazakhstan, and it is completely different from the expectations of analysts and industry experts.

Saudi Arabia and Russia-the two most powerful members of the OPEC+ alliance-have been disagreeing over how to respond to the changing oil market and falling demand. Russia is worried that US shale oil will take advantage of OPEC+ member states’ production cuts. This is not entirely wrong. Russia focuses on market share. On the other hand, Saudi Arabia focuses on price. Although the term “price” has never been used. Instead, the phrase “market balance” or “restore balance to the market” is preferred. As Saudi Arabia reduces 1 million barrels of oil a day, two things are clear: 1) Saudi Arabia feels the market is weak, which may be due to the maintenance season of refineries in Asia and due to the new and more virulent Covid-19, Other producers cannot afford (and are unwilling) to further reduce production. 2) Although Saudi Arabia is still the most powerful member of OPEC, its power has been weakened…




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