Saudi Arabia’s Oil Price War Gamble: Can It Win When Demand, Not Supply, Is the Problem?

Saudi Arabia is once again flexing its muscles in the oil market, flooding supply to discipline OPEC+ cheaters like Kazakhstan and Iraq—but this time, weak global demand threatens to undermine its strategy. With prices already below $60/barrel and a prolonged trade war between the U.S. and China dampening consumption, the kingdom risks a lose-lose scenario: lower revenues and a fractured OPEC+ alliance.

Key Developments:

• OPEC+ Opens the Taps: The group will add 960,000 bpd by June, with plans to unleash 2.2 million bpd by November—a move that sent Brent crude below $60 and futures into contango (a sign of oversupply fears).
• Demand Dilemma: Unlike past price wars (2014, 2020), today’s slump is driven by Trump’s tariffs and slowing trade, not just excess supply. Asian and U.S. demand isn’t rebounding as it once did.
• Budget Pressure: Saudi Arabia needs **90+/barrel∗∗tobalanceitsbudget,yetisbettingitcanoutlastrivalswith∗∗debtfinancing∗∗(PIFraised90+/barrel∗∗tobalanceitsbudget,yetisbettingitcanoutlastrivalswith∗∗debtfinancing∗∗(PIFraised11B this year).
• OPEC+ at Risk: If prices stay low, Russia and UAE could revolt, fracturing the alliance that underpins Saudi influence.