BRICS : Saudi Arabia shakes Russia with its new oil strategy !

Amid global economic volatility, Saudi Arabia has made a decision that could redefine energy and geopolitical balances. As the price of a barrel of oil reached $100, Riyadh chose to significantly increase its oil production, a maneuver aimed at driving down crude prices in international markets.

A Saudi strategy to reduce oil prices

Saudi Arabia, the new member of the BRICS and the world’s largest oil exporter, has announced a substantial increase in its production to put pressure on the price of a barrel, currently at $100. This strategy, described as a response to market instability, aims to ease inflation fears plaguing many global economies. According to official statements, Riyadh justifies this decision by the need to “maintain a balance in energy prices and support global economies.” This move also marks a departure from the current production-cutting policies adopted within OPEC+ and the BRICS to maintain both high prices and absolute control over global oil production.

The Saudi decision is all the more critical as the global economy faces a period of great uncertainty. Such an increase in supply could quickly lead to a drop in oil prices, directly affecting the revenues of other producing countries, notably Russia. For Moscow, whose oil revenues represent an essential part of the national budget, this new price drop could exacerbate the economic difficulties caused by Western sanctions, further reducing its ability to finance its operations in Ukraine.

Russia facing new economic pressure

Indeed, the increase in Saudi production and the subsequent drop in oil prices could be a severe blow to Russia, whose economy heavily depends on hydrocarbon exports. This potential drop in crude prices directly threatens Kremlin revenues, further weakening an economy already strained by Western economic sanctions. Thus, a prolonged drop in oil prices could reduce Russian tax revenues by billions of dollars, posing challenges for financing public expenditure and, in particular, the war in Ukraine.

Faced with this potential loss of income, Russia will need to turn to unconventional alternatives and solutions to maintain its capital flow.

The increase in Saudi oil production and the resulting drop in the price of a barrel are not without consequences for the Russian economy. Already weakened by sanctions and the war in Ukraine, Russia now faces a reduction in its oil revenues, which could further exacerbate its economic difficulties. However, it is hoped that this situation does not further heighten tensions within the BRICS group, to which both of these powerful oil producers belong.