It's also important to keep in mind that there’s only one country in OPEC+ that is fully compliant - and that is Saudi Arabia. Everybody else is, at best, partially compliant, and now we're talking about increasing supply. There are clearly countries that are putting out more supply than is recognized by the markets and products balances are now at the mercy of macroeconomic headwinds everywhere. The US administration is introducing so many policies that are dangerous for demand. There are obviously still supply shock risks such as with Iran sanctions, and activities around the Red Sea and Gulf of Aden, but it's all against the background of a fundamentally soft market.
How impactful have stricter US sanctions been on Russian and Iranian oil?
On Russia, there was a clear impact at first hitting very specific tankers and focusing a lot on Far East and Arctic barrels, but it was short-lived, and things corrected, with those volumes being shuffled around by smaller companies moving barrels, which in turn then enabled the existing larger companies to also engage. We're starting to see the Indian market tentatively come back to pick up some of those again, having turned more to Gulf producers in recent months to manage risks. On Iran, there’s been a little impact, with some of the floating storage up, and a slight drop in exports, but it didn't even get to the 2024 volume lows. We're also starting to see a rebound now, with barrels moving back to Chinese teapot refineries. Hitting second or third tier companies is going to be very difficult because shadow bank can suddenly pop up in rural China. There’s talk of possibly inspecting ships, especially in Southeast Asia, to try to block things. That would be a step up, but if it remains this cat and mouse sanctions game, the odds are it's not going to have a significant effect in the medium term.