In terms of supply for Q3, the situation from OPEC+ is relatively clear and will keep the market balanced short-term. Seasonally, we expect draws in Q3 unless reinforced by exogenous factors. We had larger-than-expected draws in June, and we expect July’s draws to continue to be significant but still within range. Overall, the third quarter will see shorter supply, and Q4 will also be slightly shorter compared to last year, but this is all in preparation for significant length in the market in Q1 2025.
Expectations for non-OPEC+ countries adding significant supply in H2?
Our forecast for US production has been more bullish than other forecasts, including those from the EIA and IEA. Our estimate for Iran’s production is slightly above 3.5 million b/d. The 4mn b/d target number that the country has mentioned, is only achievable if there are developments to unlock negotiations with the US; I don’t expect this to happen before the elections in November, given the current geopolitical situation in the region.
How much can the election of a reformist President in Iran alter relations with the US?
The Supreme Leader is the key driver of the major policies in the region. None of the presidents in Iran have been full-power presidents; they have had to play their cards based on the orders they receive. However, this presidential election is significant because of how the candidates lined up and the strong endorsement and approval signaled by the Supreme Leader when he showed his ballot at the election, indicating a desire for change. He wants the reformists promises to be fulfilled because the economy, social satisfaction, support for the regime, and his rulership are at their lowest point. But despite this, it won’t be easy for Iran to come to the negotiating table and win something without making significant exits from Lebanon, Syria, and Yemen.