Saudi Arabia could make it difficult for Russia's budget by announcing an increase in oil production. This move could lead to lower oil prices, an important factor in Russia's budget.
The Financial Times reported that Saudi Arabia plans to abandon its oil price target, previously set at $100 a barrel, in preparation for increased production.
The Kingdom plans to increase production starting in December this year and is ready to lower oil prices.
According to the announcement, Saudi Arabia will increase its average daily output by 83,000 barrels per month. Starting from December 2025, the output will increase by 1 million barrels. The kingdom currently produces 8.9 million barrels of oil per day.
The decision comes despite OPEC+ members previously cutting production in an effort to keep prices high. Brent crude oil prices fell below $70 in early September, the lowest level since December 2021.
Saudi Arabia's increased oil production, especially when combined with falling oil prices, is likely to hurt the Russian economy.
Experts told Newsweek that Saudi Arabia's move will "put a strain" on Russia's budget as it continues its military campaign in Ukraine.
Orysia Lutsevych - Head of the Ukrainian Forum at Chatham House - told Newsweek that oil and gas are still one of Russia's main budget sources.
So far, despite the EU-imposed price ceiling, Russia has been rushing to increase those revenues, which is the key to funding the country's military campaign in Ukraine. A drop in oil prices, if significantly reduced, would put more strain on the Russian budget.
The announcement from Saudi Arabia marks the end of an informal deal between Riyadh and Moscow that lasted more than a year. The agreement is related to limiting production within the OPEC+ framework to push up oil prices.
The deal has already raised concerns in the West. The close relationship between the throne heir to the throne, Prince Mohammed bin Salman, and Russian President Vladimir Putin, and Riyadh's rotation to Moscow have also caused concern, as Riyadh was once a close ally of Washington.
Moscow and Riyadh are closer thanks to US expansion in the energy market, especially in shale gas and oil production. It is this convergence of oil interests that led to the expansion of the oil alliance and the formation of OPEC+ in 2016.
Now, according to Newsweek, Saudi Arabia's interests have prevailed. If Riyadh does indeed increase production, Brent crude oil prices could fall below $60 a barrel in 2025.
