Out of the 18 countries with targets, 11 have met theirs. If this trend continues, the planned production increments should be feasible. OPEC+ has delayed the unwinding of cuts three times, and with the gradual process set to begin in April, you’d expect a decision by March. Volumes will be released over 18 months, with very small increments, and when you factor in the compensation cuts being made by several OPEC+ members, the actual increase in supply is phased out to some extent.
Is there a lack of geopolitical risk pricing in the market?
It’s not unusual for markets to ignore geopolitical risks, we saw this throughout last year. The market has become so accustomed to high levels of geopolitical uncertainty, particularly in the Middle East, that it has almost become desensitized. Headlines emerge, and yet they don’t seem to factor into pricing. But we’ve seen how quickly situations in the Middle East can deteriorate. There may very well be a miscalculation in how the market is pricing in these risks. We should also watch Iran closely. This so-called maximum pressure strategy remains unclear. So far, the sanctions we’ve seen are just a continuation of what Biden had in place, nothing new. But if more stringent measures materialize, it’s been suggested by Iranian sources that crude exports could be significantly impacted, dropping back to 200, 000–300, 000 b/d. But even then, the spare capacity available within OPEC+ would provide a good cushion.