By Rebecca Feng, Georgi Kantchev and Summer Said

Saudi Arabia has opened the oil spigots. Among the biggest beneficiaries: President Trump.

Crude prices have fallen this year as a result of what Riyadh has officially cast as routine oil-market management. In reality, strategists say the kingdom is trying to achieve several objectives: claw back market share lost to Brazil, Guyana and U.S. shale producers; rein in members of the cartel it dominates that routinely exceed quotas; and raise cash for massive infrastructure projects now beset by cost overruns and delays.

Whatever Riyadh's goals, the gambit has benefited the Trump administration. More Saudi crude has helped lower gas prices at the pump, something Trump has repeatedly called for. He said in January he would press Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries cartel to cut prices.

Falling oil prices are helping to blunt the inflationary effects of Trump's tariffs and boost the U.S. economy just as households and businesses grow cautious. Average gas prices were $3.16 a gallon last week, according to AAA, down slightly from a year ago. Trump has also said cheaper oil will intensify the economic strain on Russia, strengthening his hand in efforts to mediate the war in Ukraine.

White House spokeswoman Taylor Rogers said Trump was "making the U.S. the powerhouse of oil and gas production once again," ensuring low gas prices. "President Trump is providing producers with the resources they need to unleash innovation, reduce break-even costs, and lead in global energy markets to provide affordable and reliable energy," she said.

The president, his business and his family have long cultivated close ties with Saudi Arabia and Crown Prince Mohammed bin Salman. The kingdom was the first foreign stop of his second term. Earlier this year, Riyadh pledged $600 billion of investment in the U.S., spanning the defense, artificial intelligence and energy sectors.

The Trump Organization, meanwhile, has joined with Saudi developers on real-estate projects, including Trump-branded towers. Last month, the Saudi sovereign-wealth fund joined with Trump's son-in-law, Jared Kushner, in a $55 billion deal to buy the videogame maker Electronic Arts.

The current Saudi strategy marks a contrast from the former President Joe Biden's years, when the administration's battle against rampant inflation was made much harder by runaway oil prices. In 2022, the then president fist-bumped Prince Mohammed and pressed the Saudis to increase production to counteract the price surge that followed Russia's invasion of Ukraine. The Saudis, however, refused to budge.

Now, people familiar with Saudi and OPEC decision-making said Riyadh's main goal is to reclaim market share and reassert the cartel's dominance, with any benefit to Trump ultimately a bonus.

"Delivering more barrels offers a double win for the Saudis -- scoring points with Trump and recapturing some market share lost to U.S. exporters in recent years," said Clayton Seigle, senior fellow at the Center for Strategic and International Studies in Washington, D.C.

Saudi Arabia was one of America's top crude suppliers before the shale boom eroded U.S. dependence on foreign oil. But Riyadh continues to wield outsize sway over oil prices through its command of OPEC, which controls up to 40% of the world's oil output. Its clout grew further in 2016 with the creation of OPEC+, an alliance between the cartel and other oil producers, including Russia.

OPEC is expected to approve another oil production increase when members meet on Sunday. This week, oil prices slid to a four-month low ahead of the meeting. The Saudi government didn't return a request for comment.

There are two pathways to lower oil prices: ramping up U.S. domestic output or asking OPEC to increase production, said Jorge León, head of geopolitical analysis at Rystad Energy, who formerly worked for the cartel. The first isn't happening at the moment, as U.S. shale producers have largely depleted their best spots and are focusing on keeping costs down. "That is not so much driven by economics. Geology starts kicking in now," he said.

Enter Saudi Arabia, OPEC's kingpin. But unleashing more oil onto global markets carries numerous risks for the kingdom.

For a start, a steep drop in prices could gut U.S. shale producers and anger a president who has implored wildcatters to "drill, baby, drill."

"This is why the Saudi production increases have been very incremental: They're not dumping five million barrels a day on the market and putting the U.S. oil industry out of business," said Ellen Wald, senior fellow at the Atlantic Council's Global Energy Center.

More broadly, pumping more oil depresses prices, creating fiscal headaches for the country. At the same time, the move lets Saudi Arabia entrench itself with key customers, especially in Asia. The hope is those relationships will pay off when prices recover.

Saudi Arabia can pump crude oil at a cost of less than $10 a barrel, analysts estimate -- a huge cost advantage over U.S. shale producers. But the International Monetary Fund estimates the kingdom's fiscal break-even oil price is $92 a barrel, meaning Saudi Arabia needs to sell oil at that level or higher to bring its fiscal deficit down to zero.

Brent trades around $65 a barrel, down from around $75 at the end of last year, and considerably below the kingdom's fiscal break-even price. Some think that is still too high.

"Among all the energy investors I spoke to, there is a general feeling of slight bemusement that oil prices haven't fallen further," said Chris Wheaton, an oil and gas analyst at Stifel.

Despite years of trying to diversify its earnings, the kingdom still derived 53% of revenue from the oil sector in the first half of this year, according to the Saudi Finance Ministry. In the three months through June, total revenue fell 15%, as a 29% plunge in oil revenue wasn't fully offset by a modest rise in other income.

Riyadh has sold assets and loaded up on debt to ensure it can still fund its spending ambitions. Last year, it sold shares in crown-jewel oil company Aramco and issued $65 billion of debt -- up 30% from 2023, according to budget documents. Its Finance Ministry expects public debt to total nearly 32% of gross domestic product by year-end, up from just 5.8% a decade earlier.

Write to Rebecca Feng at rebecca.feng@wsj.com, Georgi Kantchev at georgi.kantchev@wsj.com and Summer Said at summer.said@wsj.com

(END) Dow Jones Newswires

October 03, 2025 22:00 ET (02:00 GMT)

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