Compliance within OPEC+ will continue to be a major issue this year.

In 2024, Iraq, Kazakhstan, and Russia were the main focus, although by the end of the year, Russia had moved closer to compliance. Iraq recently faced an outage at Rumaila, taking about 300, 000 b/d offline, which could make it easier for them to meet their targets. Kazakhstan, however, has just expanded production at Tengiz. Last year, their brief periods of compliance were largely due to maintenance shutdowns. The challenge for Kazakhstan is that many of these projects are developed by IOCs, which means securing IOC buy-in is necessary to take large volumes off the market. This puts Kazakhstan in a slightly different position compared to other OPEC+ producers.

Will OPEC+ face any major challenges from Trump’s new tariffs?

It remains to be seen whether they will coordinate a response to Trump's policies, whether on tariffs, market unpredictability, and the potential for increased price volatility in the coming months. OPEC has always maintained that its goal is market stability, and while they avoid setting specific oil price targets, navigating volatility remains a priority. One major question for the group is what happens with sanctions. It’s unclear which of the three main sanctioned countries, Russia, Iran, or Venezuela, will face immediate targeting by the US. Since Russia’s invasion of Ukraine in 2022, Iran and Venezuela, which are exempt from OPEC+ quotas, have increased their output by nearly 900, 000 b/d. If any action were taken to restrict those barrels, we could see upwards pressure on oil prices. Iran has nearly maxed out their production capacity, and analysts are suggesting that, this time around, the impact of sanctions may not be as severe as before in terms of Iranian barrels coming off the market. However, the latest sanctions that were imposed by the Biden administration have significantly impacted Iranian shipping. When you combine that with simultaneous restrictions on Russian shipping, it does raise the question of logistical challenges in getting barrels to market, on top of any new sanctions also starting to affect production levels.