Saudi Arabia's proposed initial public offering to its state-owned oil company, Saudi Aramco, is fueling talk that it could spell the end of the price-control group known as the OPEC. But there is a crucial point omitted from such a study.
On the ground, it makes sense that after the state-owned oil company has been listed, the future of Saudi membership in OPEC is in doubt. After all, a publicly-traded Aramco will be under pressure from investors to boost short-term profits and shareholder dividends, something they don't have to worry about right now. As more Aramco stocks are sold to private investors, the desire to maximize profits will grow, particularly if the Saudi Royal Family is looking for a second listing on large foreign exchange.
Aramco's normal way of responding to requests for more revenue would be to boost production. Aramco, the largest oil company in the world, produces about 10 million barrels a day at the moment. Saudi Arabia still has about 2 million barrels per day of spare capacity–oil that could be poured into the market within weeks if the Saudis choose.
Because of its meagre production costs, Aramco has a competitive advantage over other oil-producing regions. Aramco allures breakeven costs of less than $10 a barrel in its 658-page bond prospectus–the lowest in the world. The United Arab Emirates, its closest competitor, spends $20 to produce a single barrel of oil. The Russians have to spend $40 a barrel, and the price is up to $50 a barrel in America's rich shale fields.
As of 2025, a growing number of market watchers, including the International Energy Agency (IEA), was worried about the worldwide demand for oil will continue to diminish. Trying to increase its share of the global market before a slowdown occurs would make sense for Saudi. Today, the kingdom generates some 10% of the global oil demand for 100 million barrels a day. Through throwing lower-cost oil on the market, it could easily raise its slice of the pie if it felt such commodities could become trapped in a fossil-free future.
The stakes are high for Saudi Arabia, which is based on 266 billion barrels of reserves–the world's largest proven source of traditional low-cost crude.
It is then clear to see how Riyadh might rethink its relationship with OPEC's other member nations, which since the beginning of 2017 has been under unilateral production cuts to help higher oil prices.
Saudi Arabia's dilemma is that any attempt to grab a larger market share by rising production means a lower price for every barrel it produces, reducing its asset quality.
It's too well known for U.S. shale producers as a lesson. Competition has driven down production costs in West Texas and other U.S. fracking markets, saving U.S. customers billions of dollars annually, but in the end, cutting profit margins. When export income shrinks, companies are spending less on finding new oil reserves. Finally, with cheap oil being harder to produce, oil prices are rising and production budgets are following suit. Boom and bust, this is the oil sector phase.
Historically, with some notable exceptions, OPEC has been serving as a cap on oil prices. It is in OPEC members ' interest to stabilize the oil price so that it stays high enough to support healthy earnings but not so high that people start chanting for substitutes such as electric vehicles.
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