Oil prices plunged below $23 a barrel for the first time in 18 years after Saudi Arabia vowed to keep producing at a record high “over the coming months,” doubling down in its price war with Russia.
For the last 10 days, Riyadh has issued nearly daily statements raising the stakes in its shock-and-awe battle with Moscow, first announcing record price discounts, then unprecedented production.The kingdom is now vowing to pump flat out for months to come. The energy market has taken these as a green light to sell, sending prices down about 45% since a failed OPEC+ meeting this month.
“What we are seeing here is essentially the atomic bomb equivalent in the oil markets,” said Louise Dickson, an analyst at Rystad Energy A/S, in an email. “With each day there seems to be yet another trap door lying beneath oil prices, and we expect to see prices continue to roil until a cost equilibrium is reached and production is shut in.”
Riyadh appears to be heading to a Darwinian survival of the fittest for the energy industry, in which the highest cost producers, including U.S. shale companies and others working Brazil’s offshore fields, will suffer enormously. The Saudi Ministry of Energy “directed Saudi Aramco to continue to supply crude oil at a level of 12.3 million barrels a day over the coming months,” according to a statement.
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