ORGANIZATION of the Petroleum Exporting Countries (Opec) warned that President Donald Trump’s trade policies risk stoking volatility in global markets.
The new tariffs have “added more uncertainty into markets, which has the potential to create supply-demand imbalances that are not reflective of market fundamentals, and therefore generate more volatility”, the oil producers’ group said in a monthly report on Wednesday (Feb 12).
Trump has ramped up tariffs on goods from China and on all imports of steel and aluminium, while also threatening additional duties on Canada and Mexico, roiling crude prices.
The president has also urged the Opec to “cut the price of oil”, renewing a refrain from his first term in office. Crude futures are trading near US$76 a barrel in London, having retreated about 17 per cent from last year’s peak.
Opec and its allies – jointly led by Saudi Arabia and Russia – will decide in the next few weeks whether to press on with plans for resuming halted production from April, a move they have delayed three times so far. The coalition has been withholding supplies since 2022 in a bid to shore up prices.
United Arab Emirates Energy Minister Suhail Al Mazrouei said on Wednesday he expects Trump to take a pragmatic approach towards Opec, noting the president’s co-operation with the group’s efforts to stabilise world oil markets during the 2020 pandemic.
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The report from Opec’s Vienna-based secretariat also showed that several members are doing a better job of implementing the supply curbs.
Russia and Iraq have belatedly delivered their agreed cutbacks, with each country in January pumping just below the output quotas set at the beginning of last year.
However, neither appears to have made much progress in fulfilling the additional curbs promised as compensation for previous overproduction, while Kazakhstan – another long-term laggard – continued to produce in excess of its designated ceiling.
The cartel kept forecasts for world oil demand and supply largely unchanged, continuing to project that consumption will grow by 1.4 million barrels a day this year and next – a higher rate than most other forecasters. Last year, it was forced to slash growth projections six times in a row. BLOOMBERG
