Yes - it could be seen as political, but it’s also strategic. They’ve likely decided that now is the right time to claw back market share. That said, they live in a different forecasting world. OPEC’s demand projections are much higher than those from the IEA or EIA. Just yesterday, the IEA said demand growth is expected to slow in the second half of the year. But OPEC still estimates demand growth at around 1.3 million b/d. OPEC and other agencies have also lowered their expectations for U.S. production growth, so OPEC+ probably sees a short-term opportunity. Saudi Arabia could flood the market if it really wanted to. They’re sitting on more than 3 million b/d of spare capacity. So, this is a measured move, and it doesn’t come without internal tension either, it impacts Russia, an important OPEC+ ally. For now, I think they see this price dip as temporary. Brent is holding around $64; it’s not moving significantly in either direction. We’ll have to see what happens at the June 1st meeting and whether they choose to increase production further.
Can oil market take direction from recent developments with US tariffs?
Not really. The 90-day extension is a pause, not a trade deal. And technically, the US President doesn’t have the authority to finalize trade deals; those require Congressional approval. So much of this feels like smoke and mirrors. For investors, uncertainty is the biggest issue. There’s still a 10% tariff in place and no clarity on what comes next. The real story to watch now is the Iran negotiations. The signals from Tehran are mixed, positive one day, negative the next, but there does seem to be momentum. Trump, whatever else you say about him, prefers to make deals rather than start wars. And that’s important for this region. Saudi Arabia, which is trying to attract foreign direct investment as part of its Vision 2030 agenda, requires stability. Another conflict would be disastrous. If Tehran is willing to make concessions, even modest ones, a deal could go a long way to calming nerves and keeping capital in the region.