{"id":9720,"date":"2025-09-05T10:58:04","date_gmt":"2025-09-05T14:58:04","guid":{"rendered":"https:\/\/www.fundamentalanalytics.com\/?p=9720"},"modified":"2025-09-08T11:07:23","modified_gmt":"2025-09-08T15:07:23","slug":"saudi-arabia-want-more-crude-oil-produced","status":"publish","type":"post","link":"https:\/\/www.fundamentalanalytics.com\/ar\/saudi-arabia-want-more-crude-oil-produced\/","title":{"rendered":"Saudi Arabia Wants More Crude Oil Produced"},"content":{"rendered":"

Dr. Ken Rietz<\/p>\n

Crude oil prices are dropping, rather rapidly compared to recent declines. The price of crude oil dropped more than 3.5% in two days earlier this week. Of course, the media has the answer: OPEC+ countries expect to\u00a0continue increasing production<\/a>.\u00a0Admittedly, that likely is the biggest factor. But it is rare for price changes to have a single cause, and this is no exception, even though the media doesn\u2019t cover it very well. In this commentary, we dig a bit deeper into the reasons that Saudi Arabia is spearheading production increases in the OPEC+ countries, since Saudi Arabia is the titan of OPEC+.<\/p>\n

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 <\/p>\n

Figure 1: Front-month futures for ICE Brent crude oil<\/em><\/span><\/p>\n

The news from the markets is very one-sided; the price is going to drop. The graph never gives any help in determining the cause of the drop, and it certainly can\u2019t tell us much about Saudi Arabia. Some of these assertions about Saudi Arabia are conclusions people have drawn based on their actions and interpretations of their intentions, so be careful.<\/p>\n

It is not obvious why Saudi Arabia wants to increase the amount of crude oil it produces. After all, that reduces the price of crude oil and cuts into their profits. Generally,\u00a0this is a<\/a>\u00a0standard market tactic to recapture market share.<\/a>\u00a0It increases the amount of crude oil that they sell. Additionally, it puts pressure on producers who can\u2019t profitably produce oil at the lower price, and can even put some producers (that is, competitors) out of business. The Saudis admit that the cuts will reduce their oil income and are prepared to reduce government spending accordingly. It is also important to \u201cunwind\u201d the earlier production cuts, and this is a managed way to accomplish that. OPEC+ will allegedly consider further raising oil production at a meeting on Sunday.<\/p>\n

There are also some more distant reasons.\u00a0The Saudis are reportedly upset with some OPEC+<\/a>\u00a0countries that regularly exceed their quota<\/a>,<\/a>\u00a0so this will affect those countries most, hopefully to bring them back into line.\u00a0Various indications point to a market that can support an increased<\/a>\u00a0production<\/a>,<\/a>\u00a0which makes this increase a clever move right now. It is also getting into the hottest season in the northern hemisphere, and the highest usage of oil to generate electricity to run air conditioners.<\/p>\n

What are the trading implications of these maneuvers in crude oil production? It is clear that the price of crude oil will drop, and the market has already factored that into the futures. But the preponderance of reasons for increased production is likely to cause the price to continue to fall. Selling crude oil futures, or an equivalent of that, seems to be the most prudent way to go.<\/p>","protected":false},"excerpt":{"rendered":"

Dr. Ken Rietz Crude oil prices are dropping, rather rapidly compared to recent declines. The price of crude oil dropped more than 3.5% in two days earlier this week. Of course, the media has the answer: OPEC+ countries expect to\u00a0continue increasing production.\u00a0Admittedly, that likely is the biggest factor. But it is rare for price changes […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[],"class_list":["post-9720","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts\/9720","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/comments?post=9720"}],"version-history":[{"count":1,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts\/9720\/revisions"}],"predecessor-version":[{"id":9722,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts\/9720\/revisions\/9722"}],"wp:attachment":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/media?parent=9720"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/categories?post=9720"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/tags?post=9720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}