The OPEC+ decision to again delay adding more barrels can’t be untethered from President-elect Trump’s looming move back into the White House. Catch up quick: OPEC+ producers on Thursday postponed plans to begin unwinding 2.2 million barrels per day of curbs until at least April 2025.
• And they’ll slow-walk these incremental additions through September 2026.
• They also pushed back other production increases from the end of 2025 until the end of 2026.
Why it matters: Trump’s plans — including tariffs on China and elsewhere that could be bearish for oil demand — were a factor, analysts say.
The big picture: “Trump’s tariff-forward stance toward China and persisting weak demand provided the group with all of the encouragement needed to extend production cuts until the first quarter of 2025,” Rystad Energy’s Mukesh Sahdev said in a note.
• Producers are also likely waiting to see how much Trump might toughen sanctions on Iran and Venezuela, which in contrast to tariffs could tighten the market.
Reality check: Trump’s arrival is hardly the only thing on OPEC+ members’ minds as they gauge the market.
• “I don’t see Trump’s election having much impact on [Thursday’s] OPEC+ decision. Global demand forecasts have been growing more bearish since before any mention of tariffs on China,” oil analyst Ellen Wald told Axios.
• It’s possible Trump’s tariff threats played into OPEC ministers’ demand views, “but issues like China’s lackluster stimulus efforts likely played a much more significant role,” she said via email.
What we’re watching: How much — or how little — the U.S. oil industry responds to Trump’s “drill baby drill” mantra.
• The conventional wisdom is that Trump won’t change production growth much, especially in the near term, as drillers respond more to prices and investor rewards.
• Some new evidence: Chevron said Thursday it’s cutting upstream spending next year, including in the Permian Basin, where “production growth is reduced in favor of free cash flow.”
The bottom line: RBC Capital Markets analysts see a “compelling case for [OPEC+] waiting to see the barrel impact of the change in power in Washington.”
• “Come spring, there should be a clearer picture of the actual Trump tariff and sanctions policy agenda,” they said in a note.