[mardifoufs]

But they do have a special advantage right now simply because their hedge removes a lot of the pressure they would get right now from the low prices. They have less incentives to cut production right now because they have hedged their output for a while so they can't be pressured as much at the negotiation table. Why would they want higher prices in the short term when it will only be at their disadvantage because even a huge production cut would not drive prices above the strike price of their puts anyways. It would only favor unhedged producers.

Also, It doesn't matter if their hedge costs as much as what it earns them over the years, the advantage they have right now is still real. And while yes, hedging is a common form of insurance in the oil industry, I don't know of any other oil producing state that hedges so much of their production.

So what I meant in my comment is that the revenue stability they have right now but other oil producers don't gives them an outsized negotiating power versus a country like for example Angola, that really cannot afford to not cut production if the Saudis demand it.