Saudi Arabia is significantly ramping up oil production, a strategy that serves both Trump administration's political objective of lowering oil prices and Saudi Arabia's strategic intent to reclaim market share and reestablish OPEC's dominant position.

OPEC is expected to approve another round of oil production increases at its member countries meeting on Sunday (October 5). This week, oil prices fell to four-month lows ahead of the meeting.

Analysis indicates that Saudi's production increase involves multiple strategic considerations: first, to reclaim market share captured by Brazil, Guyana, and U.S. shale oil producers. Second, to constrain OPEC member countries that frequently exceed their production quotas.

According to sources familiar with Saudi and OPEC decision-making, Saudi's primary objective is to regain market share and reassert the cartel's dominance, with any benefits to Trump ultimately being additional gains.

Note: A cartel refers to organizations that jointly control product output and prices through agreements, aiming to avoid excessive competition and maintain overall interests. The Organization of Petroleum Exporting Countries (OPEC) is a prominent cartel example.

This year, increased Saudi crude supply has helped lower U.S. gasoline prices, which aligns with Trump's repeatedly stated objectives. He indicated in January that he would urge Saudi Arabia and other OPEC members to reduce oil prices.

**Saudi Production Expansion Supports Trump's Economic Agenda**

Falling oil prices are mitigating the inflationary effects of Trump's tariff policies and boosting the U.S. economy as households and businesses become increasingly cautious. According to AAA data, recent average U.S. gasoline prices stand at $3.16 per gallon, slightly down from the same period last year.

White House spokesperson Taylor Rogers stated that Trump is "making America a powerhouse in oil and gas production again," ensuring low gasoline prices. She said:

"Trump provides producers with necessary resources, unleashes innovation potential, reduces breakeven costs, and positions the country as a leader in global energy markets."

Clayton Seigle, senior researcher at the Center for Strategic and International Studies in Washington, stated:

"Providing more oil is a win-win for Saudi Arabia—it scores points with Trump while reclaiming some market share lost to U.S. exporters in recent years."

**OPEC's Strategic Considerations for Reshaping Market Dominance**

Before the shale oil boom reduced U.S. dependence on foreign oil, Saudi Arabia was one of America's largest crude suppliers.

However, Saudi Arabia continues to wield significant influence over oil prices through its control of OPEC, an organization that controls up to 40% of global oil production.

The formation of the OPEC+ alliance in 2016 further strengthened its influence, including the cartel and other oil-producing countries including Russia.

Jorge León, head of geopolitical analysis at Rystad Energy and former OPEC staff member, pointed out that there are two paths to lower oil prices: increase U.S. domestic production or request OPEC to boost output.

The first path is currently unrealized, as U.S. shale oil producers have largely exhausted their best drilling sites and are focusing on cost control.

He said, "This isn't very economically driven; geological factors are now starting to play a role."

However, Saudi's production increase strategy faces numerous risks.

Sharp oil price declines could severely damage U.S. shale oil producers, potentially angering the president who has consistently urged oil companies to "drill like crazy." Ellen Wald, senior fellow at the Atlantic Council's Global Energy Center, stated:

"This is why Saudi's production increase has been very gradual: they haven't dumped 5 million barrels per day into the market to bankrupt the U.S. oil industry."

More broadly, increased production that drives down oil prices creates fiscal distress. Analysts estimate that Saudi Arabia's crude extraction costs are less than $10 per barrel, giving it a significant cost advantage over U.S. shale oil producers. However, the IMF estimates the kingdom's fiscal breakeven oil price at $92 per barrel.

Brent crude currently trades at approximately $65 per barrel, down from around $75 at year-end, well below the kingdom's fiscal breakeven price.

Despite years of attempting to diversify revenue, 53% of income still came from the oil sector in the first half of this year, according to Saudi Ministry of Finance data. In the three months ending in June, total revenue declined 15%, with oil revenue plummeting 29%, while modest growth in other revenues failed to fully offset this impact.

Notably, the production increase allows Saudi Arabia to build closer relationships with key customers, especially Asian clients. Analysis suggests that Saudi hopes these relationships will pay dividends when prices recover.