The war of oil production is under way as the Kingdom of Saudi Arabia has announced that it will increase oil production to 12.3 million barrels per day in April. This decision is on the back of a split with the OPEC Plus group which is the OPEC members and Russia/others that have not been able to agree on production cuts to keep prices at so-called 60 dollar market levels. Since the split at meetings in Vienna, Austria, in which Russia walked out, Saudi leadership said it would pump aggressively while the US and Russia sat back and watched.
Contrary to what many believe, Russia is not able to suddenly increase or decrease output, the Saudis can and the US can in shale. This explosive production increase triggered a crude price selloff of 25% – the biggest selloff since 1991 when the Gulf War was taking place. The Saudi Aramco shares faded by 10% (trading was halted) then rallied by 9.88% higher the following day. This type of price action tiggers wealth swings of billions of dollars each day.