OPEC and its de-facto leader, Saudi Arabia, are facing challenges in their efforts to stabilize the world oil market as prices experience their longest downward trend in five years. The decline, fueled by a surge in US oil supply, has raised concerns that Saudi Arabia may resort to a "market share war" to regain control.

According to Reuters, oil prices have been in a downward spiral for the past seven weeks, marking the longest slide seen in five years. On Friday, Brent crude, the international benchmark, rose 2% to $75 a barrel. However, this still represents an 18% drop from mid-October levels when Brent traded around $92 a barrel. Similarly, West Texas Intermediate crude rose 2% to $70 a barrel on Friday, but remains approximately 19% lower than mid-October levels.

The decline in prices over the past two months is a significant setback for OPEC and Saudi Arabia, who have been working to counter the fall for the last year. OPEC+ members have implemented multiple production cuts throughout 2023, with a joint agreement for a 2.2 million barrel-a-day cut scheduled through the first quarter of 2024. Saudi Arabia and Russia have already taken steps to enact around 1.3 million barrels of these cuts voluntarily.

In response to the ongoing decrease in prices, Saudi Arabia's energy minister has suggested the possibility of further production cuts if required. However, market participants seem unperturbed by the threats of tightened supply, attributing the price decline to increased US oil production. The US has witnessed a boom in oil production this year, with crude exports reaching nearly 6 million barrels per day, nearing a record high.

The outlook for oil demand also adds to the challenges faced by OPEC and Saudi Arabia. With economies across the globe slowing down and a greater focus on renewable energy, expectations of softer oil demand in the future are emerging. The Institute for Supply Management reported that US manufacturing activity fell for the 13th consecutive month in November, indicating decreasing demand. Additionally, China, one of the largest consumers of crude oil, is grappling with its own economic issues, further impacting demand.

In light of these pressures, Paul Sankey, an energy expert, suggests that Saudi Arabia may resort to a "market share war" against the US. This tactical move would involve flooding the global oil supply during the first half of 2024 in an attempt to regain control of prices.

As OPEC and Saudi Arabia grapple with the challenges presented by booming US supply, softer global demand, and economic uncertainties, the future of the oil market remains uncertain. The outcome of their efforts to regain control and stabilize prices will have significant implications for both producers and consumers worldwide.