Saudi makes up shit when they say their extraction costs are $3/barrel. A lot of clever accounting in that one. Actual extraction costs are roughly $10-$15/barrel.

Why do they or why would they make up extraction costs? (Genuinely interested)

Posturing. They want to intimidate producers (and their investors) that have much higher extraction costs, like U.S. frackers and Canadian oil sands firms. "We can bring oil to $10/barrel and still be profitable," you can imagine them saying threateningly.

exactly what exhilaration says below! I work in the oil and gas business. U.S. independent oil companies are survivors. If I have to pick between the U.S. shale producer or Saudi kingdrom, I'll pick the U.S. shale producer every time.

To have an upper hand in negotiation. Everyone knows Saudi can win the war of attrition with oil at low prices they just don’t know by how much.

Still far cheaper then almost everywhere else. $3 or $15