Trump’s tariffs cut off American market from efficient Chinese production. That is making American prices grow. To compensate, Trump wants energy price go even more down. If this will hurt American shale producers and OPEC plus, Trump is ready to live with it.
Trump’s tariffs cut off American market from efficient Chinese production. That is making American prices grow. To compensate, Trump wants energy price go even more down. If this will hurt American shale producers and OPEC+, Trump is ready to live with it. What will Saudis do?
Saudi Arabia will likely take actions to stabilize global oil prices to ensure sufficient revenue for its economic diversification goals (Vision 2030), potentially leading to production cuts or coordinated action with OPEC+ to counteract U.S.-driven downward price pressure. They are unlikely to simply absorb a price crash that threatens their economy.
Here are the potential actions and considerations for Saudi Arabia:
Implement production cuts: Saudi Arabia and other OPEC+ members could agree to reduce production further to prop up prices and prevent a market oversupply. The group has previously shown a willingness to make cuts to stabilize the market.
Leverage diplomatic ties: Despite past tensions, U.S.-Saudi relations have recently focused on strategic partnerships beyond oil, including nuclear energy and defense. Saudi Arabia might use this renewed leverage to negotiate favorable terms or guarantees from the U.S. administration in exchange for oil policy alignment.
Prioritize market share (less likely in the short term): In the past, Saudi Arabia has initiated price wars to drive out high-cost producers like U.S. shale firms. However, the current high-stakes environment and need for consistent revenue make a sustained price war less likely as it would hurt their own budget.
Focus on economic diversification: Saudi Arabia will continue to accelerate its Vision 2030 plan to reduce its reliance on oil revenues, making it more resilient to oil price fluctuations in the long run.
Seek guarantees from the U.S.: Any decision by Saudi Arabia to align with U.S. demands for lower prices would likely require solid incentives, such as a mutual defense agreement, support for its civil nuclear program, and technology transfer for AI ambitions.
In essence, Saudi Arabia will prioritize its long-term financial stability and national interests, and will likely resist U.S. policies that inflict severe pain on its oil revenues without significant concessions in return.
“OPEC members struggling to preserve their market share amid a sinking price for oil now have an unexpected new variable to contend with: President Trump's move to dominate Venezuela's oil supply and push the market in a direction that would benefit American consumers.
Trump, who has long championed increased oil production and a target price of $50 a barrel, is planning a sweeping initiative to rehabilitate Venezuela's oil fields and market its output, people familiar with the matter said.
That would reshape the global oil map -- putting the U.S. in charge of the output of one of the founding members of the Organization of the Petroleum Exporting Countries and, along with America's own prodigious production, give it a potentially disruptive role in a market already struggling with oversupply.
While analysts expect that reviving Venezuela's dilapidated oil industry will take huge investments and a lot of time, they say even a small near-term output increase -- followed by a larger rise over the longer run -- could exacerbate the global imbalance and push prices further down.
OPEC members now face the difficult question of whether to try to prop up prices by cutting supply at the risk of hurting their revenue and market share -- and potentially their relationships with the unpredictable U.S. president.
"The onus is on everyone to manage their own interests but at the same time not poke the bear," said David Oxley, chief climate and commodities economist at Capital Economics. "That's an inherent tension weighing on the global market."
Some members believe if the Venezuelan administration changes regulations to make the oil industry attractive to American investors, the country could pump an extra 2 million barrels a day within one to three years, up from less than 1 million barrels a day now, Gulf OPEC delegates said.
Saudi Arabia for now is waiting it out, people familiar with the matter said. Its reasoning is it will take years to restore production in Venezuela, where American companies will want a legal framework and potential U.S. government guarantees before investing the billions of dollars needed to repair Venezuela's run-down infrastructure, the people said.
While Venezuela has vast oil reserves, its crude is a heavy, high-sulfur variety that is considered low quality and commercially unattractive.
Other Gulf members of OPEC believe Trump's plans could have a silver lining. If he disrupts the flow of Venezuelan crude to China, it would force that giant consumer to turn to the Gulf for more supplies, Gulf delegates said.
Even so, the U.S. play for Venezuela will complicate the group's effort to manage the market as vast reserves fall under U.S. control and out of OPEC's orbit, the delegates said.
According to analysts at JPMorgan, the combined oil reserves of Guyana, where large U.S. companies dominate the industry, Venezuela and American producers could give the U.S. sway over about 30% of the global total.
"This shift could give the U.S. greater influence over oil markets, potentially keeping oil prices within historically lower ranges, enhance energy security, and reshape the balance of power in international energy markets," the bank said in a recent report.
OPEC, along with allies including Russia, is already struggling to come up with a strategy to manage Trump's push for low oil prices. While the president has repeatedly called on the cartel to increase oil production, its members worry prices are already too low. At a meeting Sunday, OPEC along with Russia and other producers agreed to hit pause on any oil output increases for the first three months of this year.
A barrel of Brent, the global oil yardstick, is currently changing hands for around $63. Benchmark U.S. crude is hovering around $59 a barrel, both down around a fifth from a year ago.
Whatever happens with Venezuela's output, analysts agree that low oil prices will persist, straining the bottom lines and budgets of global producers.
A sustained drop below $50 a barrel -- the profitability threshold for many companies -- could cripple the U.S. shale industry, which has strongly supported Trump. Many U.S. drillers already are ignoring the president's exhortations to boost output, choosing instead to adhere to Wall Street's demands for strict capital discipline.
Saudi Arabia can pump crude oil at a cost of less than $10 a barrel, analysts estimate. But according to Capital Economics, the kingdom needs prices above $100 to bring its fiscal deficit down to zero.” [1]
1. Trump's Venezuela Oil Grab Worries OPEC. Kantchev, Georgi; Said, Summer. Wall Street Journal, Eastern edition; New York, N.Y.. 12 Jan 2026: A1.
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