Crude Oil Slips as Saudi Arabia Eyes Production Expansion

Brent crude futures declined by $1.13 or 1.76 per cent during the session to $63.12 a barrel and the US West Texas Intermediate (WTI) crude futures dropped $2.21 or 3.66 per cent to close at $58.21 a barrel.

The month of April 2025 was the lowest settlement for crude prices since March 2021, with Brent shedding 15 per cent and WTI losing 18 per cent, the biggest monthly percentage declines since November 2021.

Saudi Arabia, one of the world’s biggest oil producers, signaled it was unwilling to prop up the oil market with further supply cuts and could handle a prolonged period of low prices.

This marks a big shift after the Middle East kingdom spent the last five years balancing the market through deep output as a leader of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+).

Earlier, Saudi Arabia pushed for a larger-than-planned OPEC+ output hike in May, a decision that helped send oil prices below $60 a barrel to a 4-year low, in addition to President Donald Trump’s policy shifts.

Since OPEC+ establishes targets to keep supply and demand balanced in oil markets, Saudi Arabia has reportedly been angered by Kazakhstan and Iraq producing above their targets.

Saudi Arabia has a very low cost of production but it needs higher oil prices to pay its spending and when oil prices fall, many large oil-producing countries come under pressure to cut their budgets.

Saudi Arabia needs oil prices above $90 to balance its budget, higher than other large OPEC producers such as the United Arab Emirates, according to the International Monetary Fund (IMF).

Since OPEC+ is cutting output by over 5 million barrels or 5 per cent of global supply, to which Saudi Arabia is contributing around 40 per cent, plans to boost its production, this signals a worry for the market.

The group will meet on May 5 to discuss output plans.

The market continue to express concerns over the global economy weakening continued to pressure oil prices.

President Donald Trump’s announced tariffs on all US imports on April 2 and China responded with its own levies, stoking a trade war between the world’s top two oil-consuming nations.

US crude oil stockpiles fell unexpectedly last week on higher export and refinery demand, limiting some price losses.

Crude inventories fell by 2.7 million barrels to 440.4 million barrels in the week ended April 25, the Energy Information Administration (EIA) said on Wednesday.