Saudi Arabia Launches a "Moderate Oil Price War"? BofA: OPEC+ Output Hike Signals Battle for Market Share

BofA commodities chief says Saudi Arabia is waging a "moderate but prolonged" oil price war via OPEC+ production hikes, targeting U.S. shale producers and internal OPEC rivals. This strategic maneuver could reshape the global oil landscape.

As global energy dynamics shift once again, Saudi Arabia appears to be quietly initiating a new phase of price warfare. Francisco Blanch, head of commodities research at Bank of America, stated recently that Saudi Arabia is leveraging OPEC+ output increases to launch a “moderate but prolonged” price war aimed at reclaiming its dominance in a fragmented global oil market.

According to the latest OPEC+ agreement reached on May 31, member states will collectively increase oil supply by 411,000 barrels per day starting in July. This marks the third consecutive production hike and a clear departure from previous strategies aimed at sustaining higher oil prices.

Blanch emphasized that this is not a sharp, aggressive price collapse, but rather a gradual, strategic adjustment. The target: U.S. shale producers, who have recovered well but face higher marginal costs, and some OPEC+ nations whose output has grown while Saudi Arabia shouldered the burden of supply discipline.

“Saudi Arabia has been supporting prices almost alone for over three years. Now, it’s choosing not to go it alone anymore,” Blanch noted.

Early signs suggest this shift is already taking effect. Recent data from Baker Hughes shows U.S. active oil and gas rigs have dropped to the lowest level in nearly four years. Morgan Stanley analysts also predict continued OPEC+ increases over the next three months, which could fully reverse the voluntary 2.2 million barrels/day cuts enacted in 2023, potentially putting further pressure on oil prices.

Saudi Arabia’s “moderate price war” signals more than just a supply adjustment—it may mark a fundamental realignment in global oil power dynamics.