OPEC+ did not increase oil production despite Trump’s calls

OPEC+ countries decided to keep the production restrictions agreement in force until the end of this year, ignoring Donald Trump’s calls to lower oil prices.

Meanwhile, Trump’s tariffs on imports from Canada and Mexico raised oil prices.

According to OPEC’s press release, the monitoring committee of the cartel and its partners, co-chaired by Russia and Saudi Arabia, decided not to change the current oil production policy.

Production quotas, which were lowered more than two years ago, will be kept at their current levels, while the monthly increase plan agreed on in December, which will be valid from April to the end of 2026, will continue.

According to Bloomberg, delegates stated that Trump’s call to increase oil supply was not discussed.

Just three days after taking office, Trump reiterated his intention to lower oil prices and called on OPEC countries while addressing the participants of the World Economic Forum in Davos via video conference: ‘I’m going to ask Saudi Arabia and OPEC to lower the cost of oil. It needs to be lower. Frankly, I’m surprised they didn’t do it before the elections [in the US].’

Trump claimed that central banks around the world would lower interest rates ‘immediately’ after oil prices fell.

His thesis that oil is overpriced was also reflected in his remarks on the war in Ukraine: ‘The price is now high enough for this war to continue. It is necessary to lower the price of oil, and this will stop the war… It is irresponsible that they have not done this so far. We will lower oil prices and Russia will immediately stop the war with Ukraine.’

Russian Deputy Prime Minister Alexander Novak said at the meeting of the monitoring committee that OPEC+ should stick to its current policy. Meeting participants emphasized the importance of full compliance with the current agreement parameters.

Vandana Hari, founder of Singapore-based Vanda Insights, told Bloomberg: ‘I don’t expect OPEC+ to listen to Trump’s demands or wishes, whatever you want to call them. OPEC+ is developing its supply strategy very carefully, very fine-tuning it according to the situation in the market.’

Last year, the alliance of oil-producing countries postponed its production increase plan three times in order to support oil prices. Now, it plans to increase production by 120 thousand barrels per month from April, bringing a total of 2.1 million barrels back to the market by the end of the year.

However, although the cartel points to the strong fundamentals of the market and the expectation of a recovery in oil demand from April, many experts doubt such a development.

China’s economy is growing slowly and is rapidly switching to alternative energy sources, while production in North and South American countries is increasing.

According to the International Energy Agency’s forecasts, even if OPEC+ does not increase production, there will be a surplus of 750 thousand barrels per day in the global market in 2025.

For this reason, Citigroup and JPMorgan Chase predict that OPEC+ will again abandon plans to increase quotas.

Meanwhile, Trump’s imposition of a 25 per cent tariff on products from Canada and Mexico over the weekend (this rate will be 10 per cent for Canadian energy resources) caused an increase in oil prices.

The American WTI type gained more value than North Sea Brent oil; but then prices fell back to Friday’s closing levels on concerns of accelerating inflation and slowing economic growth.

Aldo Spanjer, senior commodity markets analyst at BNP Paribas, said the new tariffs will put some upward pressure on WTI, as US refineries in the Midwest will have to find other sources to replace expensive Canadian and Mexican oil.