Kazakhstan in February pumped more than 1.76 million b/d, exceeding its quota by 300, 000 barrels. The group must solve this issue of non-compliance. If OPEC+ sticks to its plan to pump an additional 138, 000 b/d from April, by the end of June we'll have around 400, 000 extra barrels on the global market and possible oversupply. On the other hand, we are seeing the US adding more sanctions pressure on both Venezuela and Iran, which could be a good opportunity for OPEC+ to pump more oil. But Trump is also thinking that there could be more Russian oil if ceasefire negotiations progress. And if prices go above $70 or $75, that's a good opportunity for shale drillers in the US to ramp up production - I think that’s part of Trump’s plan.
Can OPEC+ reclaim market share at these prices?
A price range of $68–$78 is a critical red zone for OPEC+, because they lose both market share and revenue. When oil is trading at $72 per barrel, they lose $150 billion per year due to production cuts. Their strategy should be to push prices down to $60–$65, which will trigger more demand and allow OPEC+ barrels to be absorbed. That range would open buying appetite for China to replenish its storage, and the US could also buy more oil to fill its SPR. This way, OPEC+ could keep its market share, stabilize the market, and eventually push prices back up. It’s a two-pronged advantage: regaining market share and positioning to profit when prices rebound.
What would the resumption of more Russian gas to Europe mean for Algeria?
Algeria is the biggest natural gas producer in Africa and has always played a crucial role in ensuring steady supplies to the European market. At the moment though, European markets are facing spikes in LNG prices, especially for gas coming from the US. European storage levels are currently around 35% so it will be a big challenge for Europe to get that to 90% by November 1st. If no deal is reached with Russia, Europe will face difficulties. They may secure more US LNG, but the big question is at what price.