The oil industry is abuzz following OPEC+'s decision to maintain its gradual oil output increase strategy while also dropping the U.S. Energy Information Administration (EIA) from its list of trusted data sources. This shake-up in the oil markets aligns with a period of heightened geopolitical tensions and volatile oil prices.
While the decision to continue with the existing production plan was anticipated, the change in data sources caught some off guard. OPEC+ has now opted for Kpler, OilX, and ESAI for production and compliance data, dropping Rystad Energy alongside the EIA. An OPEC+ insider attributes the switch to communication issues rather than political motives, though the timing has sparked discussion.
This change in data sources comes as OPEC+ navigates through challenging times. The group has been cutting output by 5.85 million barrels per day (bpd) since 2022, a substantial amount representing 5.7% of global supply. They have adopted a cautious approach, delaying production increases due to weak demand and growing non-OPEC supply.
However, things are about to shift. Starting in April, OPEC+ plans to scale back 2.2 million bpd of cuts, beginning with a monthly increase of 138,000 bpd. This includes granting the United Arab Emirates permission to raise its output. It's a delicate task to balance satisfying demand without overwhelming the market.
The oil market has been volatile. Prices reached $83 a barrel in January, driven by concerns over U.S. sanctions on Russia, but have since eased to below $77. Yet, recent tariffs imposed by the Trump administration on major U.S. trading partners like Mexico, Canada, and China have reignited market concerns about potential supply disruptions.
Former President Trump has been vocal about urging OPEC to increase production to lower prices, arguing that high oil prices help Russia finance its conflict in Ukraine. This is not the first clash between Trump and OPEC+ over production levels, particularly during his past presidency when U.S. sanctions on Iran tightened supply.
The market's response to these developments has been varied. Prices dipped slightly following OPEC+'s decision to maintain its current strategy, but uncertainty surrounding tariffs has provided a slight price boost.
As the situation unfolds, traders and analysts are closely monitoring upcoming months. Key questions include whether OPEC+'s gradual approach can stabilize the market, how the new data sources will influence decision-making, and the impact of geopolitical tensions globally, all adding to the unpredictability of the oil market.
One thing is clear—in the competitive arena of global oil markets, OPEC+ isn't afraid to shake things up. Whether sticking to their production plans or cutting ties with established data sources, the group is making it evident that it’s steering the course.
Learn, enhance trading skills, and access capital with our support in manual, algo, quant, and pair trading. Discover more at Promo Limex.
