« OPEC appears to be gearing up for a price war, » according to a report by Commerzbank in Frankfurt, which is why « oil prices remain under pressure which will likely continue as oil demand forecasts continue to be revised down, » it said. Saudi Arabia is the main instigator after the public producer Aramco decided on October 1 to cut prices on its oil exports, while exports to Asia reached their lowest level since 2008, according to Bloomberg.
The primary target appears to be the record US production that strongly competes with Saudi’s, particularly in Asia. The goal of Aramco is to defend its market share by renewed competitiveness by increasing the downward trend in oil prices. The decision comes in a particular context of growing doubt among Saudi top circles about the strategic intentions of the United States in the Middle East.
The alleged rapprochement between Washington and Tehran, motivated primarily by increasing security challenges in the region, is forcing Riyadh to rethink its long-term strategy. Through its major influence at OPEC, Saudi Arabia may be seeking to prove its American ally that it is still a decisive power; especially in economic matters. Behind the OPEC’s scene, a geopolitical scenario with unprecedented, and still unknown, developments is brewing.