According to Christof Ruehl, former chief economist at BP who is currently the Global Head of Research at the Abu Dhabi Investment Authority (ADIA), Saudi Arabia, the largest producer of OPEC, which shared the biggest burden of the agreed production cuts is losing market share to countries within the cartel. The lower oil price led to a considerable hole in its budget and led to record deficits in past years. That probably was the biggest of all reasons that Saudi Arabia opted for higher and stable oil price than market share. When it agreed to the cuts, it knew that others would benefit and they would lose some of the market shares.

According to Christoff, the biggest of beneficiaries of the Saudi production cuts have been Iran, which was allowed to increase production to 3.8 million barrels per day while others cut and Iraq, a country that is still producing more than its agreed target in the deal. As per the OPEC’s agreement, Saudi Arabia had to cut output by 486,000 barrels per day to a ceiling of 10.058 million barrels per day. OPEC’s second biggest producer, Iraq, promised to cut 210,000 barrels per day to a level of 4.351 million barrels per day, while Iran the third biggest producer and a regional rival of Saudi Arabia was allowed to raise its output to 3.797 million barrels per day.

Saudi Arabia has been trying to preserve its market share by lowering the official selling price for Arab Light and Arab Extra Light varieties for Asia for the past two months now. The Saudis are expected to slash Arab Light prices to Asia for June to the lowest pricing in nine months. Saudi Arabia is also said to be trying to lure buyers from the European markets by changing the way it prices its oil in order to make it easier for the companies to hedge.

The current decline in oil price (Brent is trading at $50.8 per barrel) is reducing Saudi Arabia’s incentives to continue with the deal amid fall in revenue and market share and this is likely to be a contentious issue in the upcoming Vienna meeting, where an extension of the cuts would be discussed.