Some OPEC Members See Scope to Resume Hikes in April

Some OPEC+ members see scope for the alliance to resume supply increases in April, believing concerns of a glut in global oil markets to be overblown.

The group led by Saudi Arabia and Russia hasn’t committed to any course of action or begun formal discussions ahead of its meeting on March 1, according to several delegates, who asked not to be identified as the process is private. Their ultimate decision may depend on whether US President Donald Trump launches military action against — or reaches a nuclear deal with — OPEC member Iran, one added. 

Nonetheless, some nations in the Organization of the Petroleum Exporting Countries and its allies said they see room to resume the output increases the coalition paused during the seasonal demand slowdown of the first quarter. 

Trump’s assertive stance toward OPEC members Venezuela and Iran, along with disruptions spanning from North America to Kazakhstan, drove oil prices to a strong start of the year despite warnings of a supply glut.

Several top traders have said that prices are supported by tightness in key markets, as many of the surplus barrels are from producers subject to sanctions like Russia and Iran, and thus remain unavailable to a wider pool of buyers.

That has made the market surprisingly resilient.

Brent futures are up 11% this year, after spiking to a six-month high near $72 a barrel at the end of January over concerns a conflict might erupt in the Middle East.

Oil inventories piled up last year at the fastest pace since the 2020 pandemic amid swelling output from both OPEC+ and its competitors in the Americas, according to the International Energy Agency, though the impact on prices was tempered as China scooped up barrels for its strategic reserves.

Last April, the Saudis stunned crude traders by steering OPEC+ to rapidly revive production halted since 2023 despite widespread warnings that world markets were already comfortably supplied.

Some OPEC+ delegates said the strategy pivot was aimed at reclaiming market share ceded during years of output cutbacks to rivals such as US shale drillers. Analysts have also speculated that Riyadh sought to appease Trump, who has called on OPEC to help lower fuel prices.

Eight key OPEC+ members agreed to restart roughly 2.6 million barrels a day of halted production last year, but then opted to pause in the first quarter, leaving them with about 1.2 million a day left to restore. Monthly hikes in the fourth quarter were at a modest pace of just 137,000 barrels a day.

It remains unclear whether the group will indeed ratify a further increase when it convenes online on March 1. Reuters reported they are leaning towards increasing.

Last year, there sometimes appeared to be diverging view points among top members, with the Saudis and the United Arab Emirates eager to press on with increases, while Russia seemed more cautious.

Russian Deputy Prime Minister Alexander Novak said on Feb. 3 that OPEC+ expects global oil demand to grow gradually starting from March or April. Still, the country’s output has been under pressure, declining for a second month in January as US sanctions make it difficult to find buyers.

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