OPEC+ Stands Firm Against Trump’s Pressure for Lower Oil Prices

Donald Trump’s White House return fuels global oil price debate, calling on OPEC+ for higher production to slash oil prices and curb Russia’s war funds in Ukraine. Yet, the Organization of the Petroleum Exporting Countries, together with allies such as Russia and Kazakhstan (forming OPEC+), has a track record of resisting political pressures, steadfastly focusing on market stability rather than geopolitical urgencies.

The Market Dynamics

In January 2025, with Brent crude prices hovering around $80 per barrel, the market has been volatile, influenced by new U.S. sanctions against Russia and tightened restrictions on oil-producing countries like Iran and Venezuela. Trump’s demand for increased oil supply is framed as a strategy to exert pressure on Russia amidst the ongoing conflict in Ukraine. However, OPEC+ officials have remained largely silent on this call, emphasizing their commitment to managing oil supply based on market needs rather than political demands.

Current OPEC+ Strategy

Under the agreement struck in December, OPEC+ has committed to voluntary production cuts of 2.2 million barrels per day (bpd) until the end of the first quarter of 2025, followed by a phased increase over 18 months. Additionally, a collective cut of 2 million bpd and voluntary reductions of 1.66 million bpd are set to continue until at least 2026. With compliance rates around 90%, the group demonstrates strong cohesion and a strategic approach to maintaining oil prices. Despite the political noise, there’s no indication from internal discussions that OPEC+ will alter its current strategy, especially considering the oil price remains in the mid-$70s.

Historical Precedence and Political Influence

OPEC+’s history is replete with instances where it maintained unity despite geopolitical tensions among its members, such as during the Iran-Iraq War or Iraq’s invasion of Kuwait. This resilience against political pressure is crucial as member states are cautious about actions that could be seen as acquiescing to external pressures, especially from a figure like Trump, whose policies might lead to internal discord or a perceived loss of autonomy.

Navigating Past Pressures

The group faced similar pressures in 2018 when Trump’s sanctions on Iran led to complex negotiations within OPEC+. Countries like Iran, Iraq, and Venezuela, unable to increase output, were against a collective production hike that would diminish their market share. The result was a typical OPEC compromise: a vague, undisclosed increase in production that preserved group unity.

Future Outlook and Challenges

The upcoming OPEC+ Joint Ministerial Monitoring Committee meeting on February 3, 2025, will review these dynamics, including U.S. plans for increased production. While the committee doesn’t set policy, it could recommend adjustments for broader consideration by the full group if deemed necessary. However, caution is expected to prevail, given uncertainties in global demand, particularly from China, and the broader implications of altering production strategies.

Despite Trump’s calls, OPEC+’s actions are likely to remain driven by long-term market stability rather than immediate political pressures. Saudi Arabia, a key player, plans its oil strategies over decades and is unlikely to significantly alter its course for the next four years of Trump’s presidency. The global oil market, thus, continues to operate on a complex interplay of supply management, geopolitical considerations, and economic realities, with OPEC+ navigating this landscape with an eye on maintaining its influential role in global energy markets.

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