Crude reality: Saudi blinks, Oil tanks, and the floor falls out

Oil just got walloped again—WTI plunged over 4% to sub-$58, marking April’s worst monthly massacre since 2021 and setting up what could be the ugliest April on record. Then came the knockout punch: word that Riyadh’s throwing in the towel on defending price floors, briefing allies that it can “live with lower prices” and won’t blink on cuts. Translation: Saudi’s pivoting from market stability to a full-bore market-share offensive.

After half a decade of OPEC+ deep cuts propping up the barrel, cartel cheats like Kazakhstan and Iraq ran roughshod over quotas, forcing a furious Saudi hand. Now the kingdom’s lobbying for a turbocharged output bump—May’s surprise lift to +411k bpd being only the opening salvo. Anyone banking on OPEC+ backstops is in for a rude awakening: Riyadh’s ready to let prices find their own floor, which just cracked below four-year lows.

Here’s the math: even ultra-low-cost Saudi needs north of $90 to balance budgets, so brace for cap-ex freezes and project delays. Russia’s trapped on the sidelines—its break-even sits around $70, and Kremlin spending is surging—yet it’s reluctantly eyeing faster hikes in supply. Beyond the cartel, U.S. shale, Canada and Guyana are all ramping, foreshadowing a genuine supply glut.

Demand isn’t sending good signals either. U.S. Q1 saw its first GDP contraction since 2022—tariff-front-run imports blew out net exports—while China’s factory PMI slid into outright contraction. Shipping rates and commodity flows have sniffed this out weeks ago; oil simply baptized sub-$60 on those global stall warnings.

Bottom line: we’re in a managed unwind, not a tactical market-share tug-of-war. Until real demand shows up—be it through a trade-truce breakthrough or a fresh growth spurt—expect oil to languish in the realms of oversupply. Brace for a protracted slump and look for any sign of corporate cap-ex pullbacks ( lower rig counts) or White House tax cuts and deregulation squeaks before jumping back in.