A reported threat by Saudi Crown Prince Mohammed bin Salman to flood global oil markets and potentially drive crude prices towards zero has raised concerns about the consequences of another international oil price war.
According to emerging reports, the Saudi leader is allegedly prepared to increase oil production to maximum capacity unless Russia stops supplying weapons to Iran that could ultimately reach Yemen’s Houthi rebels.
The alleged ultimatum has not been independently confirmed by an official Saudi statement, and the claims about Russian weapons transfers remain unverified.
Nevertheless, Saudi Arabia’s ability to influence international oil prices is real, and its latest production figures are already sending warning signals to energy-dependent economies.
For Trinidad and Tobago, the question is not whether oil could literally reach zero. It is what happens if prices fall below the assumptions used to finance the country’s national budget.
THE OIL MARKET IS ALREADY UNDER PRESSURE
On November 11, OPEC reported that Saudi Arabia’s oil production had increased from 8.372 million barrels per day in September to 10.563 million barrels per day in October, an increase of approximately 26%.
That represents more than two million additional barrels entering the market daily from Saudi Arabia alone.
Collectively, OPEC+ production reached 41.23 million barrels per day, approximately 97% of its pre-Iran-war production level.
Oil prices initially declined on Thursday, November 12, amid rising supply and hopes of diplomatic progress in the Middle East.
However, renewed attacks on Saudi energy facilities and shipping disruptions reversed those losses.
By the close of trading, Brent crude had risen to US$95.82 per barrel, while West Texas Intermediate finished at US$88.74.
The market is now caught between two competing forces: growing oil supplies that threaten to push prices downward and escalating military confrontations that threaten to push them higher.
T&T’S 2027 BUDGET: THE NUMBERS THAT MATTER
On October 12, Finance Minister Davendranath Tancoo presented the 2027 National Budget with the following assumptions: Oil price: US$77 per barrel. Natural gas: US$5 per MMBtu. Projected government revenue: TT$59.729 billion. Projected expenditure: TT$63.368 billion. Expected fiscal deficit: TT$3.639 billion. Budgeted oil revenue category: TT$14.355 billion.
At Thursday’s closing Brent price, oil remains comfortably above the Government’s US$77 planning benchmark.
That provides a potential cushion, but only if prices remain elevated, Trinidad and Tobago’s actual crude sales achieve favourable prices, and production targets are met.
Natural gas presents a separate challenge.
The country’s gas revenue depends on LNG and petrochemical markets, contractual pricing arrangements and production volumes. American Henry Hub prices cannot simply be compared directly with Trinidad and Tobago’s US$5 budget assumption.
The danger is therefore a simultaneous deterioration in oil prices, realised gas prices and domestic energy production.
WHAT HAPPENS IF ENERGY REVENUE FALLS?
The Government has budgeted TT$14.355 billion under its oil revenue category.
Consider two illustrative scenarios:
Scenario One: A 10% revenue shortfall.
If that budgeted revenue category underperforms by 10%, the Treasury would collect approximately TT$1.44 billion less.
Assuming expenditure and all other revenues remain unchanged, the projected fiscal deficit would increase from TT$3.639 billion to approximately TT$5.07 billion.
Scenario Two: A 20% revenue shortfall.
A 20% reduction would remove approximately TT$2.87 billion in projected revenue, increasing the deficit to approximately TT$6.51 billion.
These are stress-test illustrations, not forecasts. A 10% decline in oil prices does not automatically produce a 10% decline in Government revenue, particularly because taxation, gas prices and production volumes influence the outcome.
But the figures demonstrate how quickly a relatively narrow fiscal deficit can deteriorate.
There is also a worrying precedent.
The Government’s original fiscal 2026 deficit projection of approximately TT$3.86 billion was subsequently revised to TT$7 billion.
Another significant revenue or expenditure shock could undermine the Government’s ambition to restore fiscal stability in 2027.
WHAT DOES THIS MEAN FOR ORDINARY CITIZENS?
Falling oil prices could eventually reduce international fuel and transportation costs, easing some import and freight expenses.
But lower international oil prices do not automatically mean cheaper gasoline at the pumps in Trinidad and Tobago, where domestic pricing is influenced by government policy.
A sustained fall in energy earnings could instead create five major pressures:
First, reduced foreign exchange earnings. Lower export receipts could aggravate existing difficulties businesses face obtaining US dollars.
Second, pressure on employment. Energy producers and contractors could postpone investment, reduce operating expenditure or delay recruitment.
Third, greater government borrowing. Falling revenue could increase the financing required to pay for existing commitments.
Fourth, pressure on public projects and services. Infrastructure programmes, maintenance expenditure and other discretionary allocations could face tighter financing.
Fifth, slower economic growth. Reduced energy-sector activity could weaken demand across construction, transportation, retail and professional services.
These consequences would not necessarily occur immediately, but prolonged energy-sector weakness would increase their likelihood.
CAN SAUDI ARABIA REALLY DRIVE OIL TO ZERO?
Saudi Arabia possesses substantial production capacity, but it cannot independently determine the price of every barrel of oil traded globally.
Pushing prices close to zero would require an extraordinary market imbalance, not simply a decision by Riyadh to increase production.
Such a strategy would also damage Saudi Arabia’s own petroleum revenues and complicate financing for its economic diversification programme.
The more credible danger is a sustained price war that pushes crude below US$77, possibly towards US$60 or US$50, particularly if international demand weakens and other producers refuse to cut output.
Conversely, continued attacks on Middle Eastern oil infrastructure could restrict supply and drive prices higher.
Both possibilities matter to Trinidad and Tobago because uncertainty can disrupt investment decisions and government revenue planning.
THE QUESTIONS GOVERNMENT MUST NOW ANSWER
The Ministry of Finance and Ministry of Energy should clarify whether the country’s 2027 Budget has been stress-tested against oil prices of US$70, US$60 and US$50 per barrel.
They should also explain how lower gas prices or delays in production projects would affect revenue, how much additional borrowing would be required under adverse scenarios, and which expenditure commitments would be protected.
Trinidad and Tobago cannot control Mohammed bin Salman’s decisions, Russia’s foreign policy, the Houthis or global oil markets.
What it can control is the prudence of its fiscal planning.
The lesson is straightforward: A national budget built on energy revenue must be able to withstand energy-market shocks.
The immediate danger is not oil falling to zero tomorrow. It is a Government depending on billions in projected energy receipts without publicly demonstrating how it will respond if those receipts fail to materialise.
The question is no longer simply how low oil prices could fall. It is how far Trinidad and Tobago’s finances could deteriorate before the Government is forced to adjust its 2027 Budget.
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