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As the leading crude exporter and head of OPEC, Saudi Arabia, along with its OPEC+ allies, has been restricting oil supply for over a year to stabilize the market and support prices.
Initially, the OPEC+ coalition intended to start easing some of the production cuts in October. However, following a significant drop in oil prices in late August and early September, the group postponed the reduction of 2.2 million barrels per day (bpd) until December 2024.
This decision had minimal impact on oil prices, as the market had largely anticipated a delay, particularly after OPEC revised its global oil demand growth forecast downward in August due to concerns about China's economic performance.
In its September report, OPEC further reduced its demand growth projections, which contributed to a decline in oil prices and affected market sentiment.
In just two months, concerns over demand have shifted traders' and speculators' outlook from bullish to the most bearish stance on petroleum futures since 2011.
Despite the prevailing weak market sentiment and uncertainty regarding the potential impact of recent Chinese stimulus measures on oil demand, Saudi Arabia remains committed to beginning the unwinding of production cuts on December 1, as reported by the Financial Times sources.
Recent analysis indicates that the Kingdom has acknowledged the necessity of enduring a phase of reduced oil prices in order to regain market share.
For over a year, Saudi Arabia has maintained a production level of approximately 9 million barrels per day (bpd) and has adhered strictly to this target. However, this strategy has resulted in a loss of market share, not only to non-OPEC+ producers but also to other members within OPEC and the OPEC+ coalition.
In response to a report from the Financial Times stating that Saudi Arabia plans to increase production in December regardless of market conditions and prices, oil prices reversed earlier gains on Thursday, plummeting by more than 3% during early European trading.