Opec+ hesitant on oil output rise amid US sanctions

Reuters/Essam Al-Sudani

• Split in Opec+ over ending cuts
• Trump’s moves make decisions complex
• Analysts expect cuts to continue

Opec+ is debating whether to raise oil output in April as planned or freeze it, as its members struggle to read the global supply picture because of fresh US sanctions on Venezuela, Iran and Russia, eight Opec+ sources said.

Opec+ usually confirms its supply policy one month in advance to have time to allocate crude to buyers.

Hence, the group has until March 5-7 to finalise its April production, but no consensus has emerged so far, some of the sources said.

Inside Opec+, the UAE, keen to make use of its rising output capacity, would like to proceed with the increase, as would Russia, some of the sources said. Other members including Saudi Arabia favour a delay, they said.

US President Donald Trump has renewed pressure on Opec to bring down oil prices, which rallied above $82 a barrel in January to multi-month highs after Trump’s predecessor, Joe Biden, slapped new sanctions on Russia.

• Opec+ market share to fall as US ramps up oil output

• Opec oil cuts push Oman’s revenue down $1.7bn

• Fear of oil-price collapse lurks behind Opec+ cuts decision

Since then prices have fallen to $73 on hopes that Trump would help clinch a peace deal between Russia and Ukraine and boost Russian oil flows. However, his plans to cut Iran’s oil exports to zero and his cancellation this week of a licence for Chevron to operate in Venezuela have prevented prices from falling further.

The combination of those bullish and bearish factors have made decision-making for April extremely complex, the eight Opec+ sources said. They said that Trump’s plans for global tariffs could reduce oil demand and complicate the outlook even further.

All sources declined to be identified by name because of the sensitivity of the matter.

Opec and the Saudi government communications office did not respond to requests for comment. The office of Russian deputy prime minister Alexander Novak and the UAE energy ministry did not immediately respond to requests for comment.

Delaying output rise

Opec+, which includes Opec members plus Russia and other allies, is cutting output by 5.85 million barrels per day (bpd), equal to about 5.7 percent of global supply, in a series of steps since 2022 to support the market.

In December, Opec+ extended its latest layer of cuts through to the first quarter of 2025, pushing back the plan to begin raising output to April. The extension was the latest of several delays.

Based on that plan, the gradual unwinding of 2.2 million bpd of cuts, the most recent layer, and the start of an increase for the UAE begins in April with a monthly rise of 138,000 bpd, according to Reuters calculations.

Some analysts, such as Morgan Stanley, have said they expect Opec+ to prolong the cuts again.

Helima Croft of RBC Capital Markets said Opec+ could delay the rise until the second half of 2025 because of the uncertainty over sanctions and tariffs.