
Bloomberg News
At the first meeting of OPEC+ since Donald Trump called on members to bring down oil prices, the cartel defied the US president.
During an online review Monday, the alliance led by Saudi Arabia and Russia chose to maintain its current trajectory on crude production despite Trump’s exhortations.
Consequently, OPEC+ is committed to continuing with supply curbs the rest of this quarter and reviving production only gradually thereafter. When the group comes to finalize its decision on the first hike a month from now, it could potentially postpone the increase — already delayed three times — again.
Such a move sounds guaranteed to provoke a flurry of angry Truth Social posts from the White House. But it might not matter.
Even if Riyadh and partners keep output flat, the International Energy Agency sees a hefty global surplus of 750,000 barrels a day this year as booming American supply overwhelms tepid growth in demand. A nascent US-China trade war amplifies the threat to consumption.
Oil Glut Looms Even If OPEC+ Defies Trump
Stockpiles will still swell should the cartel extend curbs
And should the Saudis steer OPEC+ to prolong the supply curbs officially, enforcing them is another matter.
Group members known for flouting their production targets have stepped up their compliance in recent months. But a host of temptations to open the taps may soon test that commitment.
In Kazakhstan, Chevron Corp. completed an expansion of the giant Tengiz oil field last month. Iraq is taking steps to restart a pipeline from the semiautonomous Kurdish region that’s been shuttered for almost two years.
And sooner or later, the United Arab Emirates may grow impatient to implement the separate hike it secured in recognition of its growing production capacity.
By the fourth quarter, JPMorgan Chase & Co. predicts Brent crude futures will fall from current levels of about $75 a barrel into the $60s range. Citigroup Inc. believes they could undershoot the $60 mark.
When OPEC+ holds its next full ministerial meeting in May, the downturn may be well underway.
While that may not entirely fulfill Trump’s campaign pledge to slash energy costs, it might be enough to forestall another barrage of furious posts. OPEC+ could appease the new president without even trying.
–Grant Smith, Bloomberg News
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