Reports indicate that OPEC+ may unwind an additional 411, 000 b/d in August. But with
production already up by 1.37 mbd, further increases could be risky. China’s oil inventories
are at a record 1.18 billion barrels, and U.S. crude stocks rose by 3.8 million barrels last
week, an unexpected build during the summer demand season. Seasonal demand may
weaken August to October; if oil prices fall below $60 per barrel, will OPEC+ be ready
to reverse course? That remains uncertain. Adding to the complexity is the July 9 U.S.
review of tariffs imposed since “Liberation Day” on April 2. Trade negotiations with China
India, the EU, and Vietnam are still unresolved. A breakdown in any deal could disrupt oil
markets. Given these risks, it may be wise for OPEC+ to pause before adding more supply.
China’s elevated inventories and renewed imports of 1.8 million bpd from Iran, following
U.S. sanction easing, further complicate the demand outlook.
Does OPEC+ need to keep an eye on non-OPEC supply?
The U.S. rig count fell last week, signaling reduced drilling activity. This may reflect OPEC’s
success in reclaiming market share. Still, Brazil and Guyana are expanding output, Brazil’s
production rose 11% year-on-year in May to 3.68 million b/d. OPEC+ policy is clearly
pressuring non-OPEC suppliers, reinforcing its influence.
How is Algeria positioned for evolving global trade dynamics?
While tariffs are affecting many regions, Algeria is largely shielded since U.S. tariffs exclude
oil imports, its main trade link with the U.S. Despite broader trade tensions, U.S. energy
giants like ExxonMobil, Chevron, and Occidental are negotiating new projects with Algeria.
These companies see opportunities to supply Europe, which aims to eliminate Russian gas
imports by 2027. Algeria is positioning itself as a vital alternative energy source for Europe
leveraging proximity and existing infrastructure to meet growing demand.