What’s remained constant is that every country in the region shares a strong economic interest in keeping production going. That’s a powerful unifier. Today, we’re also seeing major investments across the board. ADNOC is acquiring Santos and investing $5 billion in infrastructure. Saudi Arabia is investing heavily, both domestically and abroad, in oil and gas. Iraq is ramping up production across every field. Kuwait is doing the same. As for the recent flare-up, I wouldn’t call it a war. It was a battle between Israel and Iran, and while it’s stopped for now, I doubt it’s the end. There could be more to come, but overall, things are looking much better now for oil and gas than they did a month ago.
How should OPEC+ be strategizing in H2 2025 amid this uncertainty?
Only a few countries have surplus capacity. Saudi Arabia is number one, but Iraq and the UAE are both eager to increase production. They have serious idle capacity and are under pressure to bring more of it online. There will be some competition over how much each country can raise output if cuts are eased, but OPEC were to increase its collective quota by around 1 million b/d, Saudi, the UAE, Kuwait and Iraq can all ramp up. That level of increase would match well with expected global demand growth, which, under current conditions, is projected to be between 1 and 1.5 million b/d this year, once natural declines are factored in.
Is there a viable future for Iranian gas?
Many of Iran’s current oil fields need major rehabilitation to reach their full potential. But even with that, they still won’t be able to grow oil production enough to compete with Saudi Arabia or even Iraq. Those countries have been producing for much longer, and they’re very technically capable when it comes to field development and maintaining production. The real game-changer for Iran would be the development of its gas sector, but that depends entirely on sanctions being lifted. They would need significant investment to realize that untapped potential and I don’t see it coming to market anytime soon. There’s already plenty of gas in the U.S.- they have about 11 LNG projects under construction or operational, all aiming to supply cheap gas to the world. At some point in the future, the economics might make it viable for international investors to help Iran develop and export that gas, but that requires real reconciliation between Iran and the broader global community, especially with the U.S.