Macro Voices MacroVoices #479 Anas Alhajji: What Do Saudi Arabia & Allies in OPEC+ Want from Accelerating the Unwinding of Voluntary Cuts?
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May 8, 2025 Anas Alhajji, Managing Partner at Energy Outlook Advisors and a seasoned expert in global energy markets, joins the discussion on OPEC+'s production strategies. He elaborates on the geopolitical dynamics influencing oil prices and the implications of recent production increases. Delving into the effects of Trump's presidency on U.S. oil production, he contrasts predictions for the shale industry with the evolving trends in LNG. Alhajji also offers insights into market responses to global sanctions and the shifting landscape of energy procurement.
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OPEC+ Production Increases Explained
- OPEC+ production increases mainly reflect unwinding voluntary cuts by a subgroup called the Group of Eight (V8).
- Much of the increased production was already present in the market as overproduction, so prices shouldn't fall drastically.
Summer Demand Affects Oil Supply
- Summer domestic demand spikes in oil-producing countries due to extreme heat and the Hajj pilgrimage drastically increase local consumption.
- Much of the increased oil supply from OPEC+ in May and June will be consumed domestically, limiting the global market impact.
OPEC Unity and Credibility Matter
- Claims that Saudi Arabia is punishing other OPEC members by increasing production are illogical since those members requested production increases.
- Maintaining OPEC unity and credibility is paramount to ensure compliance and effectiveness across member countries.