Saudi Arabia to boost oil production, challenging Russian budget
Saudi Arabia is preparing to impact Russia's budget by announcing an increase in oil production, which will lead to a drop in the price of the raw material, a significant component of the Russian budget.
Saudi Arabia plans to abandon its price target for oil in preparation for increased production. This target was $100 per barrel.
The kingdom plans to increase production starting in December and is ready to lower oil prices.
According to the announcement, it will increase the average daily production by around 13,200 cubic metres per month. Starting from December 2025, production will increase by 159,000 cubic metres. Currently, the kingdom produces approximately 1.4 million cubic metres per day.
A blow to Russia's budget
For Russia, this means a decrease in revenues at a time when war expenditures outlined in the 2025 budget are to be increased by another 22%, according to "The Moscow Times."
The Saudi announcement marks the end of an informal pact between Riyadh and Moscow that lasted for over a year. The pact involved limiting production within the OPEC+ format, which consequently drove up raw material prices.
Concerning agreement
This agreement worried the West, which supports Ukraine, attacked by Russia in 2022. The close relationship between the heir to the Wahhabi kingdom's throne, Prince Mohammed bin Salman, and Vladimir Putin, and Riyadh's pivot towards Moscow was all the more troubling given that Riyadh had until now been a close collaborator with Washington.
Moscow and Riyadh were brought closer by the U.S. expansion in the energy market, especially in shale gas and oil production. This convergence of oil interests resulted in the expansion of the oil cartel and the formation of OPEC+ in 2016.
Now, the kingdom's interests have prevailed. If the Saudis indeed increase production, Brent oil prices in 2025 could fall below $60 per barrel.
