There is no speculation about how OPEC+calls President Donald Trump’s decline in crude oil prices. This is not the first time he has made such a request. However, as in his first semester, the organizations of external partners such as petroleum exporters and Russia and Kazakhstan are known as OPEC+, but there is no knee response.
Except for the weakness of demand and the concerns about the increase in non -OPEC+increase in supply, market attention has been shifted to geopolitical risk -traders are called “Trump Factors.” With his return, a global benchmark brent oil maintains a hovering of about $ 80 per barrel, adding a new volatility from Russia to Russia, to petroleum producers like Iran and Venezuela. There were even more strict restrictions.
With the purpose of reducing prices, Trump called on Opec+to increase production, arguing that it would be useful for weakening Russia and ending the war in Ukraine. Group officials are not responding because the group staff is not a political attitude and keeps the focus on market management. This includes maintaining the maximum influence over the world to keep Russia firmly in the alliance.
Under the current contract agreed in December, OPEC+members promised an spontaneous reduction of 2.2 million barrels (BPD) per day by the first quarter of 2025, and gradually produced over 18 months. It was done. Along with the spontaneous reduction of 1.66 million BPDs, the 2 million BPD compound reduction has been enforced until at least 2026. OPEC+representatives say that internal discussions do not hurry to change the course. S. Cut compliance is a powerful hovering of about 90 %, an important indicator of group unity.
It is naive to assume that OPEC’s decision has no political impact, but the history has maintained uniforms, even when members go to the war, from the 1980s Iraqi Kuwait invasion. It indicates that it has a track record. Furthermore, member states are alerted to the movement that can be interpreted as succumbing to Trump when risking internal fractures and threatening the loss of the alliance and the loss of members.
If production is required, Opec+has navigated the same US pressure before. In 2018, Trump’s sanctions for Iran allowed to be strictly negotiated within the group, so that countries such as Iran, Iraq, and Venezuela can be seen that the market share will be eroded because production cannot be supported. I opposed the improvement of the results. compromise? The typical OPEC fashion has reached a vague private production. This has maintained unification within the group.
At present, the next step of Trump on sanctions against Tehran and Calacas remains unknown, as with the potential effects on the basics of supply and demand. On the other hand, US shale producers need crude oil prices to stay at $ 70 to maintain the growth of production. This is an economic reality that could temper the administration’s approach. OPEC’s Joint Ministerial Oversight Committee is scheduled to meet on February 3, and representatives are expected to assess the market situation, including plans to increase production. The committee does not set policies, but may recommend adjustments to be considered by the entire group as needed.
The warning may win. The outlook for uncertain demand in China is still a major factor, and despite the warm connections between Trump and the Riyad, the interests of Opec+elucidates the government for other US friends in Saudi Arabia and OPEC. Is too expensive. Oil policy transcends the US president. Saudi Arabia has set up an upstream strategy on the horizon for decades. This does not make a long game rattled in the next four years of Trump.
AMENA BAKR is the director of the Middle East Energy & OPEC+research of KPLER, an independent global product trade information company.
