Saudi Arabia is signaling that it’s ready for a price war with other OPEC members that would deepen oil’s biggest slump in more than two years, according to Commerzbank AG and Citigroup Inc.

Saudi Aramco, the state-run oil producer of the world’s biggest exporter, cut prices on Oct. 1 for all its exports, reducing those for Asia to the lowest level since 2008. The move suggests that the biggest member of OPEC is prepared to let prices fall rather than cede market share by paring output to clear a supply surplus, according to Commerzbank.

“There is no indication whatsoever that the Saudis are going to put a floor into this market,” Seth Kleinman, head of European energy research at Citigroup in London, said by email. “Saudi market share in Asia is really under assault. It is a price war. The Saudis will win, but it won’t be painless.”

Saudi Arabia has acted in the past to stop a plunge in prices. It made the biggest contribution to OPEC’s production cuts of almost 5 million barrels a day in 2008 and 2009 as demand contracted amid the financial crisis. The kingdom would need to reduce output by about 500,000 barrels a day to eliminate the supply glut now stemming from the highest U.S. output in three decades, Citigroup and Barclays PLC estimate.

“ OPEC appears to be gearing up for a price war,” Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt, said in a report Thursday. “We therefore do not expect prices to stabilize until this impression disappears and OPEC returns to coordinated production cuts.”

The Gulf country plans to keep output steady until the end of the year, near the 9.6 million barrels a day pumped in August and September, a person with knowledge of the nation’s oil policy said on Sept. 26. It made the biggest cut to its production in 20 months in August, according to data the country submitted to OPEC.

Refraining from further cuts would preserve the volume of Saudi Arabia’s oil sales, curb revenues for competitors and discourage production of U.S. shale oil.

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