With the Organization of the Petroleum Exporting Countries (OPEC)-plus alliance having failed to reach an agreement earlier this month to extend production cuts and boost prices, the Saudi-led cartel and former oil ally Russia are entrenched in a battle to see which one can hold out longer in an oversupplied global market, Fitch Solutions Inc. analysts said Thursday.

Senior oil and gas analyst Emma Richards said Saudi Arabia is more fiscally vulnerable to a price war and therefore more likely to blink first. The Fitch team sees the kingdom revising its strategy within 24 months and returning to its traditional role as a global market manager, curtailing supply as needed in order to boost prices.

However, 24 months might as well be a lifetime for already struggling North American producers, which will bear the worst impacts of the price war, fellow senior analyst Richard Taylor said.

He said North American onshore producers have announced 2020 capital expenditure (capex) cuts in recent days ranging from 15-50%, but that the average so far is about 30%, in line with capex reduction figuresreported Thursday by Wood Mackenzie.

Taylor said Russia is far more resilient to sustained low prices now than it was during the last oil downturn in 2015. The country’s foreign currency reserves and sovereign oil fund have both grown substantially since then, while its breakeven oil price averages around $42/bbl. Taylor said, “we agree to an extent” with Russia’s assertions that it can withstand $25-30 oil prices for six to 10 years, and that “five years, for example with the price where it is now or was this week, is probably doable.”

While wresting market share from U.S. shale operators is certainly a large part of Russia’s current strategy, U.S. sanctions on Russia related to the activity of state oil company Rosneft in Venezuela, and the Nord Stream 2 natural gas pipeline into Germany also likely were major factors, Taylor said.

Richards said Fitch Solutions expects Lower 48 production growth, which was already decelerating, to turn negative in late 3Q2020 or early 4Q202, and onshore output is likely to decline by 1.5-2 million b/d over the next 12-18 months.

Fitch Solutions is forecasting a year/year (y/y) decline of 7-10 million b/d in global oil demand for the second quarter of 2020 from the one-two punch of the coronavirus pandemic and the supply glut.

The consulting and research unit of Fitch Ratings Inc. sees a y/y decline in 2020 total oil production of 300 million bbl, meaning about 3% of global demand would evaporate, with most of that impact concentrated between February and May, Richards said.

Citing the “unprecedented” supply and demand shocks that have rocked the industry, she said Fitch has revised its 2020 forecast for the Brent crude benchmark to $43/bbl from $63/bbl.

The Brent spot price had fallen below $26/bbl Tuesday morning, down about 50% from 10 days earlier, “which is quite a shocking thing,” said Taylor.

After rallying $4.85 to settle at $25.22/bbl on Thursday, the April West Texas Intermediate contract opened at $24.73/bbl on Friday.