Markets are puzzled as OPEC+ has suddenly shifted its strategy and accelerated oil production. The move is raising eyebrows, and not just as a warning to countries that have exceeded their quotas. According to Reuters, the real motive appears to be a bid to reclaim market share from US producers.
This strategic pivot by OPEC+ is widely interpreted as a direct challenge to American oil companies, who will now need to reassess their competitive positioning, analysts say.
The last time Saudi Arabia attempted to push back against US shale production was nearly a decade ago, but it ended in disappointment. American producers had the upper hand, achieving breakthroughs in drilling technology and drastically reducing costs.
However, today, circumstances are different. US producers are more vulnerable than they were ten years ago, while Saudi Arabia continues to benefit from far lower production costs. This puts the kingdom in a position to strike back and reclaim lost ground.
Although analysts say it is too early to call this a full-blown price war, Riyadh’s primary objective seems to be sustaining uncertainty in the global oil market. Experts believe the desired price range for OPEC+ is $55–$60 per barrel, a level considered unsustainably low for many US producers.
Over the past decade, US oil output has surged by more than 60%, while OPEC nations have slightly reduced theirs. Now, America’s most productive drilling sites are showing signs of depletion, and operating costs are rising, according to analysts.
Executives at major US energy firms say they need oil prices to stay above $65 per barrel to remain profitable. At current price levels, many are already under financial pressure. ConocoPhillips estimates that if prices fall to $50, most companies, including the largest, will be forced to cut production.
