Nobody anticipated them proceeding with their plans to reintroduce volumes in April. The announcement drove prices down by about $2.5/bl. The fundamentals justifying that are lacking at the moment. There might have been strong internal pressures behind the decision, from countries like the UAE or Kazakhstan, which have been pushing for increased production due to their investments and capacity. Another possible factor could be pressure from the US administration to lower prices. OPEC+ might also be proactively responding to potential market tightness in the coming months, for example with regards to sanctioned Iranian oil exports. Nevertheless, the unwinding of the cuts had to start at some point and the reality is that these are relatively small monthly increments. The group will need to monitor any impact going forward amid a very uncertain global macroeconomic environment.
What does the ADNOC-OMV deal indicate about future strategies of Gulf oil producers?
The future for the GCC region is not only to produce crude oil, but also to go down the energy molecules route. Countries like Oman, Saudi Arabia, Kuwait, and the UAE, want to add value and petrochemical is one sector that gives the right returns. This transition to producing more specialized refined products won’t happen overnight however - crude oil production volumes in the region are huge, but I could see Oman for example in the future, being a Singapore when it comes to petrochemicals and products.