For Saudi Arabia, $80.9 per barrel is the minimum price to guarantee sustained oil revenue to fund development projects aimed at diversifying the country’s economy away from oil.
The policy adopted by Saudi Arabia as the dominant cartel producer, coupled with Riyadh’s pledge to trim its output by 1 million b/d, is likely to send Brent prices higher in July.
The market is now awaiting the reaction of the United States, with higher oil prices not being a good option for Americans. In May, the Biden administration decided to refill the country’s strategic petroleum reserve. The US Department of Energy plans to buy 3 million barrels of oil
back into the reserve, which plunged to 355 million barrels on 26 May 2023, the lowest level since October 1983 (see Fig. 3).
While the US is not willing to pay above $72 per barrel, OPEC, by contrast, seeks to support sagging oil prices.