OPEC+ Facing Challenges: Between Trump’s Pressure and Sanctions on Russia

Amid global political and economic tensions, investors are closely watching the OPEC+ meeting,
which may determine the trajectory of oil prices in the coming months.

Content:

Global Anticipation
Trump’s Influence
Diplomatic Moves
Sanctions on Russia
Meeting Scenarios
Post-March Prospects

Global Anticipation

Decisions Amid Calls for Lower Prices and Tightened Sanctions on Moscow
The global oil markets are closely monitoring the upcoming OPEC+ meeting on Monday,
as rapid developments unfold, including increasing U.S. pressure, the repercussions of recent sanctions on Russia,
and concerns about supply stability.

The meeting comes as U.S. President Donald Trump urges the organization to lower oil prices,
arguing that this could pressure Russia into ending the war in Ukraine by reducing its oil revenues.
However, Russia remains a key player within the alliance.

Trump’s Influence

Will OPEC+ Change Its Policy?
Despite Trump’s demands, an OPEC delegate told “Asharq” that the alliance’s decisions are based on market considerations
rather than political statements.
The delegate added that Trump’s remarks are not new, as he had previously called for increased production
and lower prices during his first term, which did not alter OPEC+ policies.

Experts suggest that a significant production increase could weaken Trump’s slogan “Drill,
baby, drill,” as it might undermine the ability of U.S. oil producers to boost their production.
At the same time, some analysts believe that sanctions on Iran, Venezuela, and Russia,
along with tariffs against Canada and Mexico, may limit market supplies.

Diplomatic Moves

As part of preparations for the meeting, Saudi Energy Minister Prince Abdulaziz bin Salman held discussions with officials from Iraq and Libya, focusing on energy cooperation and market stability.
While no specific details were disclosed about the upcoming meeting, these discussions highlight the alliance’s efforts to ensure market stability amid current challenges.

For more than two years, OPEC+ has been curbing supplies to support prices, with production resumption repeatedly delayed.
The group is expected to gradually increase production from April, with monthly increments of 120,000 barrels per day.

Sanctions on Russia

A New Test for the Alliance’s Unity The latest U.S. sanctions pose a new challenge to Russian oil supplies, prompting many Asian customers to seek alternatives from the Middle East. However, an OPEC delegate noted that Russia consistently finds ways to bypass sanctions and maintain its exports.

According to Goldman Sachs, the extensive U.S. sanctions on Russia’s oil sector will not lead to a “significant decline” in production,
as high shipping costs and lower Russian crude prices continue to support trade flows.
Meanwhile, analysts believe that OPEC+ will not rush to adjust its production policy in direct response to sanctions or U.S. pressure
but will instead monitor developments before making substantial decisions.

OPEC+ Facing Challenges: Between Trump’s Pressure and Sanctions on Russia

Meeting Scenarios

Will the Alliance Maintain Its Production Policy?

A source familiar with energy matters in an OPEC country stated that the most likely scenario (80% probability) is to maintain the current production policy until the end of the first half of the year.
The source warned that a sudden production increase could cause oil prices to collapse,
an outcome that producing nations would find unacceptable.

Market observers expect that OPEC+ will continue restricting supplies in the first quarter before gradually easing restrictions from April onward.
A Bloomberg survey of 15 analysts and traders indicated that the alliance aims to prevent excessive price declines to sustain investment in the oil sector.

Post-March Prospects

Will OPEC+ Increase Production? James Swanston, a financial analyst at Capital Economics,
believes that the alliance may use the post-March period as an opportunity to advance its long-term goals,
such as regaining market share through gradual production increases.

He added that Gulf countries, particularly Saudi Arabia,
could increase production to 12 million barrels per day while ensuring that prices remain above $60 per barrel,
which would support economic growth in the region.

Key Milestones in OPEC+ Production Cuts

The alliance began cutting production in November 2022 due to weak demand, particularly in China after the COVID-19 pandemic.
In July 2023, eight alliance members committed to voluntary production cuts, with Saudi Arabia shouldering the largest reduction of 1 million barrels per day, while Russia reduced its output by approximately 400,000 barrels per day.
The current total production cuts by OPEC+ amount to about 5.9 million barrels per day.
The initial reduction of 3.66 million barrels per day has been extended until 2026.
The upcoming meeting will discuss whether to revoke or maintain the voluntary reduction of 2.2 million barrels per day.

Conclusion

As markets eagerly await the OPEC+ meeting, the alliance’s decisions remain dependent on global developments,
particularly the increasing sanctions on Russia and political pressure from the U.S. Balancing market stability with the interests of oil-producing countries will keep the alliance’s decisions under close scrutiny in the coming months.

OPEC+ Facing Challenges: Between Trump’s Pressure and Sanctions on Russia

OPEC+ Facing Challenges: Between Trump&#8217;s Pressure and Sanctions on Russia

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OPEC+ Facing Challenges: Between Trump’s Pressure and Sanctions on Russia