We see what’s happening in Gaza and we've seen greater US pressure on Iran over the past few weeks. Last week, a teapot refinery in China was sanctioned, along with other elements of the shadow fleet, indicating increased pressure, and potentially removing some Iranian barrels from the market. It will depend on what materializes between the US and China. The US is also focused on trying to restart shipping through the Suez Canal, but I'm not convinced the increased pressure on the Houthis will necessarily yield results. We do see some impact from sanctions on Russian barrels, which have found it harder to reach the market and receive payment since January, but they haven't fully stopped. If there is sanctions relief for Russia, we might see around 500, 000 b/d of extra oil.
Is Iran likely to come to the table on nuclear talks with the US?
Something will need to shift as we approach summer, with the mid-June IAEA meeting, and with questions about Iran and the NPT back into focus. Trump does want to increase pressure on Iran, but he's also revealed that he wants to prioritize cheap oil, to help reduce inflation and interest rates. Perhaps he's comfortable tightening Iran sanctions for now with current oil prices, while simultaneously easing pressure slightly on Venezuela, as we saw last week. Trump would also likely push beyond nuclear concerns, to securing regional influence. Both sides are increasingly demanding more, which complicates negotiations.
Outlook for non-OPEC supply this year while OPEC+ plans volume increases?
At the corporate level in the US, there is caution on any meaningful supply additions. Tariffs are significantly impacting US energy infrastructure costs, limiting substantial new production. Canadian output may rise slightly due to Asian market access, but generally, we won't see substantial non-OPEC supply growth in 2025. On the demand side, I don't see signs of a very meaningful pick-up from emerging economies. In China, despite stimulus measures, we won’t see a shift in recent growth trends. The country is clearly moving away from being as petroleum-defined as it used to be, still consuming a lot of coal, and more natural gas than it did a decade ago.