To preserve balance and OPEC’s influence, the group sees it as necessary to curb aggressive output expansion by emerging players such as Guyana and Brazil, and so they have decided to continue increasing supply, even at the cost of lowering prices. However, several global uncertainties complicate things. Chief among them are the economic impacts of Trump-era tariffs and ongoing sanctions. These issues, individually, are far more disruptive to oil markets than OPEC’s monthly production changes. With seasonal demand rising, OPEC+ is using this window to cautiously reintroduce barrels while monitoring how these macro uncertainties play out over the next two to three months. Major flashpoints are US–Iran negotiations, the Russia–Ukraine conflict, and global trade policy - all expected to reach turning points within the same timeframe. The group is likely to reevaluate its course based on how these evolve.
Probability of a US-Iran nuclear deal in Q2?
The outlook for an Iran nuclear deal remains uncertain; while the chances of reaching an agreement are growing, we continue to model scenarios on a no-deal outcome. But despite Trump’s threats, we don’t equate a failed Iran deal with imminent war. The administration appears more inclined toward escalating sanctions than military action. Moreover, the continuation of diplomatic talks, including technical-level discussions, suggests that both sides remain engaged, and the differences may be bridgeable.
How significant is the recent Saudi–India refinery agreement?
The proposed Aramco–ADNOC refinery in India has been heralded as a strategic alliance, but these types of mega-projects no longer make economic sense in an era of plateauing oil demand. Projects of this scale are now more about political signaling than viable investment.