If you’ve filled up your gas tank recently and wondered why prices keep jumping up and down, there’s a good chance Saudi Arabia had something to do with it. In the world of oil, Saudi Arabia is a major player. In fact, it’s often called the “central bank of oil” because of the way its decisions influence global prices. But how exactly does this Middle Eastern giant control such a large chunk of the world’s oil market? And why do its policies send ripples (or sometimes waves) through global economies?

Why Saudi Arabia Matters in the Oil Market
First off, Saudi Arabia is a founding member of OPEC (Organization of the Petroleum Exporting Countries). OPEC is a cartel of 13 oil-producing countries, and they work together to control the supply of oil in order to influence its price. Saudi Arabia is the largest and most influential member of the group because it produces a staggering amount of oil. In 2023, the country is pumping out around 10 million barrels of oil per day, making it one of the top three oil producers in the world.
But it’s not just the amount of oil Saudi Arabia produces that gives it so much power. The country also has massive oil reserves, which means it can afford to cut production when prices need a boost or ramp up supply to cool off a hot market. It’s a balancing act, and Saudi Arabia often holds the scales.

The Power of Production Cuts
One of the biggest ways Saudi Arabia influences global oil prices is by deciding when to cut or increase production. When oil-producing countries want to raise prices, they reduce the amount of oil they’re selling. Why? Because lower supply usually leads to higher prices (basic supply and demand). This strategy was on full display in October 2022 when OPEC, led by Saudi Arabia, decided to cut production by 2 million barrels a day, the biggest cut since the pandemic. The move sent oil prices soaring, which didn’t sit well with consumers in oil-importing countries who suddenly found themselves paying more at the pump.
Fast forward to 2023, and Saudi Arabia has been playing a similar game. In April, the kingdom announced another surprise cut in oil production, sending prices upward again. The goal? To maintain higher prices in a market that was starting to soften due to fears of a global economic slowdown. This wasn’t a decision made in isolation—Saudi Arabia has its own economic interests at heart. The country depends heavily on oil revenues to fund its budget and ambitious development projects like Vision 2030, a plan to diversify its economy beyond oil.

Why Oil Prices Matter to Everyone
You might be thinking, “Okay, Saudi Arabia is playing with oil supply, but what does that have to do with me?” Well, oil prices influence a lot more than just what you pay at the pump. Oil is a global commodity, meaning its price is set on the world market. When prices go up, it affects everything from transportation costs to the price of goods and services. Higher oil prices can even lead to inflation, which is when the general price level of goods and services in an economy rises.
For oil-importing countries, like the United States, Europe, or Japan, this can be a serious problem. When oil prices spike, it leads to higher costs for businesses and consumers, which can slow down economic growth. In 2023, many economies are already grappling with high inflation, and rising oil prices are just adding more fuel to the fire.
On the flip side, higher oil prices are great news for oil-producing countries. Countries like Saudi Arabia and Russia make more money when prices are high, which helps balance their budgets and fund domestic programs. It’s a tricky balancing act on the global stage.

OPEC+ and the Russian Connection
Now, we can’t talk about Saudi Arabia’s influence on the oil market without mentioning OPEC+. This group includes OPEC members and a few other major oil producers, most notably Russia. OPEC+ has been a key player in managing global oil supply since 2017, and Saudi Arabia and Russia are essentially the co-leaders.
Russia, of course, has been a hot topic in the energy world ever since its invasion of Ukraine in 2022. Western countries slapped sanctions on Russian oil, and Europe has been working to wean itself off Russian energy. You might think that would give Saudi Arabia more room to step in and fill the gap, but things aren’t that simple. Russia has been selling its oil at a discount to countries like India and China, and Saudi Arabia has to be careful not to flood the market and drive down prices too much.
In fact, the Saudi-Russian relationship has been one of careful cooperation. Both countries want to keep oil prices high to protect their economies, but they also don’t want prices to rise too much and spark a global economic slowdown. It’s a delicate dance, and so far in 2023, they’ve managed to keep things steady, with Saudi Arabia sticking to its production cuts and Russia finding alternative buyers for its oil.

The U.S. and Saudi Arabia: A Complicated Relationship
When it comes to oil, the United States and Saudi Arabia have a long, complicated history. The U.S. is one of the world’s largest oil producers, thanks to its booming shale industry, but it still imports a lot of oil. Saudi Arabia has been a reliable supplier for decades, but relations between the two countries have cooled in recent years.
In 2022, when Saudi Arabia led the charge on OPEC’s production cuts, the move wasn’t exactly welcomed in Washington. In fact, President Joe Biden publicly criticized Saudi Arabia for its role in keeping oil prices high. The U.S. was facing high inflation at home, and rising gas prices were hitting American consumers hard. This strained relationship continued into 2023, especially as the U.S. has been trying to boost its own energy independence and lower reliance on Middle Eastern oil.
But even with these tensions, Saudi Arabia still plays a crucial role in stabilizing global oil markets. The U.S. can’t ignore Saudi Arabia’s influence, and the two countries continue to work together—albeit a little less smoothly than in the past.

What’s Next for Oil Prices?
So, what does the future hold for oil prices in 2023 and beyond? As always with oil, it’s tough to predict. Saudi Arabia will continue to play a key role, and its decisions on production cuts or increases will be watched closely by traders, businesses, and governments around the world.
If Saudi Arabia sticks to its current strategy of limiting production, we can expect prices to stay relatively high. But if the global economy slows down or if there’s a new supply shock—say, from geopolitical tensions or natural disasters—prices could spike even further.
On the other hand, if Saudi Arabia and its OPEC+ partners decide that prices are getting too high and start ramping up production, we could see a cooling-off period. Either way, Saudi Arabia’s energy policies will be driving much of the action in the oil market for the foreseeable future.

Final Thoughts
At the end of the day, Saudi Arabia’s influence on global oil prices is undeniable. Through its leadership in OPEC and its ability to control oil supply, the kingdom wields enormous power over what we pay at the pump and how the global economy fares. As we move further into 2023, it’s clear that Saudi energy policies will continue to play a critical role in shaping the global oil market, for better or for worse.