Oil has suffered major falls that have meant that Saudi Arabia, OPEC+’s main oil producer, finds itself in a difficult situation where it will have to assess its oil production in exchange for maintaining leadership in the organisation, as a result of the tariffs imposed by Donald Trump, which have been set at 10% for the next 90 days.
While eight OPEC+ countries have announced their decision to increase their annual production from May onwards, Saudi Arabia, together with Kuwait, will maintain their policy of reducing oil production. However, despite the cuts, the Saudi state continues to account for more than 70% of annual barrel production. Currently, Saudi Arabia produces 2 of the 3.15 million barrels of oil per day of OPEC+.
Saudi Arabia has always been a strong advocate of keeping the price of a barrel of oil at 100 dollars, as selling below that threshold raises serious questions about the financing of major national projects such as the Saudi Vision 2030 plan. Similarly, the International Monetary Fund (IMF) reaffirmed that as long as oil remains at around 60 dollars a barrel, the Arab country will need to diversify its income.
From Riyadh, they hope that applying a policy that aggravates their interests, since it is producing at its lowest level since 2011, will put pressure on countries such as Iraq, Kazakhstan and the United Arab Emirates to comply with the objectives of reducing hydrocarbon production. A problem that is aggravated by the current price of crude oil.
In a report published by the website American Oil Price, the writer Alex Kimani stated that part of the decrease in production in other OPEC+ countries is due to a failure to meet targets, and not to voluntary cuts.
As a result, Riyadh is said to be focusing on the mining industry as a fundamental pillar to be able to refinance its national projects, without neglecting the issuance of sovereign bonds, and even going so far as to postpone its strategic plans in the worst case scenario, as pointed out by Irina Slav, a contributor to Oil Price. According to Slav, if the situation is not reversed, but the plan is maintained, Saudi Vision2030 could be postponed until 2040 or even 2050.
Saudi Arabia expects to multiply its income from mining from 17 billion to 75 billion over the next 10 years. To achieve this, the country will increase its production of minerals such as gold, copper, bauxite and phosphates, a substantial element for sustainable agriculture.
This was confirmed by the Saudi Minister of Industry and Mineral Resources, Bandar Alkhorayef, who pointed out that the country had increased its mining capacity by 90%, increasing its potential from 1.3 to 2.5 trillion dollars. Alkhorayef pointed out that this increase facilitated the signing of up to nine investment agreements worth more than 9.32 billion dollars.
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