Saudi Arabia will abandon its $100 oil price target in order to win back market share

Dubai (Reuters) - Saudi Arabia is prepared to boost oil production to win back market share, abandoning its unofficial oil price target of $100 a barrel and accepting the consequences of lower prices, the Financial Times reported.

To prop up prices, the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and its Allies, OPEC+, have been reducing oil production.

However, oil prices have fallen nearly 5 percent this year due to increased supply from other producers, especially the United States, and weak demand from China.

Earlier this month, after crude prices hit a nine-month low, the bloc agreed to delay planned oil production increases in October and November and said it could further suspend or reverse them if needed.

The Financial Times, citing people familiar with Saudi thinking, said Thursday that the kingdom is committed to raising production on December 1 as planned, even if it means low oil prices for a long time.

Brent crude futures fell 2.2% to $71.84 a barrel as of 8:40 p.m. in Singapore on Thursday after the FT report was published.

The International Energy Agency (IEA) said Oil Union + market share has fallen to historic lows following production cuts since 2022 and increased supply from the United States and other producers.

According to Reuters calculations, OPEC+ oil production is equivalent to only 48 percent of global supply. Saudi crude oil production is less than 10 percent of the world market, while U.S. production has risen to 20 percent of world supply.

Saudi Arabia has decided it will not continue to give up market share and believes it has sufficient financing options, including foreign exchange reserves and debt, to withstand a period of lower oil prices.