Opec+ leaves traders with cliffhanger as stormy chapter ends
Saudi Arabia and its partners have stunned oil markets and capped futures prices in recent months by pushing more barrels into a fragile global market, offering relief to consumers and a fillip for US President Donald Trump.
The 547,000 barrel-a-day output increase they approved on Sunday completes the reversal, one year ahead of schedule, of a giant supply cutback made in 2023. The Opec+ have fast-tracked the revival in a bid to reclaim market share.
Yet they also have unfinished business: another layer of supplies, also halted two years ago, amounting to 1.7 million barrels a day, which is currently due to remain offline until late 2026. And on Sunday, delegates were offering less, rather than more, clarity regarding its fate.
Depending on oil market conditions, the coalition could press on with restarting this tranche, officials said. Or, as some delegates suggested last month, the producers could take a pause. Alternatively, if markets slump, they might even completely reverse the recent surge. A follow-up meeting was set for Sep 7 to review the situation.
'The messaging coming from today's voluntary producer meeting is that all options remain on the table, including bringing those barrels back, pausing increases for now, or even reversing the recent policy action,' said Helima Croft, head of commodity strategy at RBC Capital Markets.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Based on the outlook for the months ahead, Opec+ may actually need to consider cutting production.
While oil demand has held up this year, a projected slowdown in China and swelling supplies across the Americas leave world markets on track for a hefty surplus of two million barrels per day in the fourth quarter, according to the International Energy Agency in Paris. Weak US economic data on Friday underscored the risks to consumption from Trump's tariffs.
Forecasters such as Goldman Sachs and JPMorgan Chase see crude futures, already down 6.7 per cent this year to near US$70 a barrel in London, sliding further towards US$60 later in the year. That's considerably lower than the levels the Saudis and other Opec+ members need to cover government spending.
Goldman expects that the coalition will most likely pause and hold output levels steady for some time as it takes stock of supply and demand balances. Five crude traders surveyed by Bloomberg last week also predicted a hiatus.
On the other hand, if Riyadh is genuinely committed to pursuing market share, as sources familiar with its thinking believe, it should ignore those forecasts and press on with restarting the 1.7 million-barrel tranche regardless.
'We can expect the group to adopt a wait-and-see approach for at least the first several months,' said Greg Brew, senior analyst at Eurasia Group. 'But if there is a contraction in US supply, and if demand growth and the general macro environment remains favourable, I think further unwinding of cuts should be expected.'
The outlook is only clouded further by the geopolitical backdrop, as Trump intensifies diplomatic pressure on Opec+ co-leader Russia over its war against Ukraine.
The US president has threatened to impose secondary tariffs on Moscow's oil customers unless a ceasefire in the conflict is quickly agreed.
On Thursday, Russian Deputy Prime Minister Alexander Novak made a rare visit to Riyadh for talks with Saudi Arabian Energy Minister Prince Abdulaziz bin Salman, a meeting that officials said symbolised the solidarity between the two oil giants.
As Opec+ weighs pressure from Trump to lower prices on one side, and a desire to preserve alliance cohesion on the other, whatever it ultimately decides will involve a delicate balancing act.
'Will it move to unwind the remaining 1.7 million barrels-a-day to defend market share, especially if fresh US sanctions hit Russian oil, without putting unity at risk?' said Jorge Leon, an analyst at Rystad Energy A/S who previously worked at the Opec secretariat. 'The group is still threading a fine needle.' BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
42 minutes ago
- Straits Times
After tariff truce extended, a Trump-Xi summit in China?
Sign up now: Get ST's newsletters delivered to your inbox US President Donald Trump said that Chinese President Xi Jinping asked for a meeting. - The United States and China appear to be pulling back from their trade war, with President Donald Trump extending a pause on tariffs in what could be a prelude to a summit with his Chinese counterpart Xi Jinping in Asia. The world's two largest economies have decided to set aside threats to impose triple digit tariffs on each other for another 90 days, according to an executive order signed by Mr Trump on Aug 11, hours before an existing 90 -day trade truce with China was set to expire. A likely venue for a bilateral meeting between the two presidents could be Kuala Lumpur, which is hosting the Asean's East Asia Summit from Oct 26 to 28. Both leaders have confirmed they will attend the summit. The other possibility is the sidelines of the Apec Leaders Summit in 2025, to be held from Oct 31 to Nov 1 in Gyeongju, South Korea. But there is also a third possibility, which might hold special appeal to Mr Trump and, according to some observers, would be more in keeping with his penchant for dramatic actions: a quick trip to China. The Straits Times has learnt from sources close to the administration that preparations are underway in Washington DC for a possible US presidential trip to China in between the Asean and Apec meetings. Officials in Beijing are also on standby. Things could change, however, as it is still early days, said a source asking for anonymity to discuss sensitive information. Should it take place, the meeting would be the most critical between world leaders this year. 'It is probably not a coincidence that the summit is supposed to be at the end of October, before the trade truce expires on Nov 9,' said a DC-based source, close to US officials planning the trip. 'Everything we're hearing is that they are still working towards a leaders' meeting,' he said, adding that it could come with the expectation that China helps the US broker a ceasefire in the Russia-Ukraine war ahead of Mr Trump's Aug 15 meeting with President Vladimir Putin. 'The reading we got was that the Chinese side is pretty pragmatic and very much signalling it wants more foreign investment in China. And if the trip is very economic and business- focused, the venue could even be Shanghai,' said the source. Already, American companies are preparing a list of demands, although it is unclear if such a visit would include a large business delegation. 'If there were obstacles that were too destabilising, there would not have been a truce,' said the source. Anticipating a turning point ahead, Prof Graham Allison, the bestselling author of several books including Destined for War: Can America and China Escape Thucydides Trap, has predicted that it would be a fast track from the extension of the truce to a Trump-Xi Summit that announces a 'new partnership'. The White House has not yet released the contents of an executive order signed by Mr Trump on Aug 12 to extend the truce. But Mr Trump confirmed the extension via a social media post. 'I have just signed an Executive Order that will extend the tariff suspension on China for another 90 days. All other elements of the Agreement will remain the same,' he said. Had the truce expired, Chinese goods entering the US would be subjected to at least a 54 per cent duty. In a late night Truth Social post on Aug 11, Mr Trump had hinted that China might step up its purchases of soyabean from American farmers, one of his key political constituencies. 'China is worried about its shortage of soyabeans,' he wrote. 'I hope China will quickly quadruple its soyabean orders. This is also a way of substantially reducing China's trade deficit with the US.' China, the top customer of American soyabean farmers, bought over US$12 billion worth in 2024. Mr Trump also mysteriously thanked Mr Xi in his post, without saying why. The president, who lays great store by personal diplomacy, has himself also spoken about a possible visit to China this year. 'He (President Xi) asked for a meeting, and I'll end up having a meeting before the end of the year,' he said in a TV interview on Aug 5. A reaction from China is expected in the coming hours. Prof Allison said a thaw lay ahead. 'My hazy crystal ball suggests that Trump will announce a new 'great partnership' aimed at shifting the tone and character of the US-China relationship in a more positive direction,' he said in a post on X on Aug 12, hours after the White House announced the truce. Mr Trump treats China differently from other trading partners due to its strength, said Dr Allison, Professor of Government at Harvard University, where he has taught for five decades. The world's second-largest economy is closing the gap with the American economy, reporting over 5 per cent growth in the first half of 2025, exceeding expectations amid continuing uncertainties in global trade. The White House had calibrated its strategy, suggested Dr Allison, after seeing China hit back with 125 per cent tariffs in response to Mr Trump's threat of 145 per cent tariffs, effectively creating a trade embargo. It was the only such response in the world, he noted. More strikingly, when the US tightened some supply chain controls, China directly choked off a half-dozen critical items, including rare earth magnets, that the US companies cannot function without. 'In this situation, China has as strong a hand as the US, maybe stronger - and President Trump treats those he sees as equals differently from those he sees as weaker,' said Dr Allison. Mr Trump appears eager for a high profile visit to China, probably with the signing of a 'big, beautiful trade deal,' said Professor Dennis Wilder, a former National Security Council director who teaches courses on Chinese governance at The Bush School of Government & Public Service. Mr Trump's actions recently appear designed to make this possible, he said, noting the reversal of the ban on the export of Nvidia's H20 chips despite opposition within the Administration. There was also, he told The Straits Times, the curtailment of 'high profile engagement with Taiwan and his refusal to say anything negative about China when asked by anti-China Fox News anchors'. 'Given that his initial overtures to Putin were disappointing, Trump will want to show the world his ability to win with China.' Ms Wendy Cutler, a senior official at the Asia Society Policy Institute and former deputy US trade negotiator, said the extension was no surprise and the path ahead would be no walk in the park. 'What remains unclear is whether the US was able to get anything in exchange for this move from Beijing, such as increased soyabean purchases or more predictable access to critical minerals and magnets,' she said in a media statement. 'Having learned important lessons from the Phase One negotiations during Trump 1.0, Beijing will be a more demanding counterpart this time around,' she noted. American businesses welcomed the news of the truce extension. 'The extension is critical to give the two governments time to negotiate an agreement that improves US market access in China, addresses the bilateral trade imbalance and provides the certainty needed for companies to make medium- and long-term plans,' said a statement from the US China Business Council, a non-profit association of more than 270 American companies that do business in China. 'Securing an agreement on fentanyl that leads to a reduction in US tariffs and a rollback of China's retaliatory measures is acutely needed to restart US agriculture and energy exports,' it added, listing American companies' longstanding demands. Mr Zichen Wang, research fellow at the Center for China and Globalisation, a Beijing-based thinktank considered close to the government, said Mr Trump would get a tremendous welcome if he visited China. 'That's in line with Chinese hospitality, traditional, and diplomatic playbook, as well as a show of respect for the US and President Trump himself personally,' he told ST.
Business Times
42 minutes ago
- Business Times
Trump's trade war with China threatens these key green technologies
[NEW YORK] As the US-China tariff truce fast approaches its current deadline of Aug 12, businesses on both sides of the Pacific Ocean are holding their breath. US President Donald Trump's reciprocal tariffs, if imposed, would bleed Chinese exporters. They would also deal a fresh blow to an already troubled US climate tech industry, experts said. America's battery installers and developers stand to lose the most, said Antoine Vagneur-Jones, head of trade and supply chains at BloombergNEF (BNEF). China dominates the export of lithium-ion batteries and battery materials to the US, and supply chains cannot be quickly altered to change that. Here's how tariffs would affect batteries and other clean technologies: Utility batteries For every five lithium-ion batteries the US imported over the first five months of this year, three of them came from China, according to BNEF's analysis. That share is even higher for lithium iron phosphate batteries, which are widely used by utilities. 'This will definitely impact the battery storage market' in the US, said Tom Moerenhout, a professor at Columbia University who studies policy, economics and climate technologies. As battery deployment plays a vital role in helping smooth the intermittent nature of renewable energy, 'this will inevitably slow down the energy transition', Moerenhout said. Tariffs on utility-scale batteries made in China already stand at nearly 41 per cent. Countries such as South Korea can offer an alternative, but batteries made there are pricier than their Chinese counterparts. Trump has also slapped a 15 per cent levy across the board on imports from South Korea, further raising the price for any would-be importers. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up While the US has started to develop its domestic battery supply chain, building it out will take time, Vagneur-Jones said. The battery makers that are operating in the US will also be hit by Trump's trade war, which could weaken their ability to increase production. Companies such as LG Energy Solution and Fluence Energy have invested heavily in expanding their manufacturing capacity, but American-made batteries rely on imported components, including battery cathodes and anodes, many of which are traditionally sourced from China. Rare earth minerals China also has a stranglehold on another part of the US clean tech supply chain: rare earths. The Asian nation mines more rare earth minerals than any other country and controls roughly 90 per cent of the global refining capacity. While the Trump administration has largely exempted rare earth imports from tariffs, Beijing introduced export controls in early April on several strategic materials and related products as part of its retaliation to Trump's reciprocal tariffs. The supply chain disruption wreaked havoc on various US industries. Automaker Ford, for example, was forced to temporarily shut down one of its factories in May due to the difficulty of obtaining rare-earth magnets, which power everything from seats to audio systems and windshield wipers. It was not until Jun 11, when the two countries agreed on a new trade framework, that China resumed regular exports of rare earths to US companies. It's unclear whether the export curb would return if the trade negotiation falls apart. 'Rare earths are a bargaining chip between China and the United States,' said Grant Hauber, a supply chain specialist at the Institute for Energy Economics and Financial Analysis, a think tank. 'Because policy decisions have been so erratic, you can't take anything off the table.' Many US climate tech manufacturers would take a hit if Beijing once again weaponises rare earths. Neodymium magnets, one of the components that are included on China's export restriction list, for example, are critical for electric vehicle motors. The material is also commonly used in wind turbines. Long-term effects This comes against the backdrop of Trump killing government support for a wide swath of emissions-cutting technologies, with a particular focus on electric vehicles and wind farms. The renewables industry has been taken aback by how widespread the attacks have been, and that's been reflected in the growing number of project cancellations. In the first half of 2025, companies cancelled, closed or scaled back US-based green projects worth more than US$22 billion, according to research group E2. That was before Trump signed a tax law wiping out clean tech incentives, and the latest round of tariffs took effect. American and Chinese negotiators wrapped up their third round of high-level trade talks late last month in Stockholm, without inking any agreement. That has raised doubts over whether the world's two largest economies will be able to strike a deal before Aug 12. While Trump said last week that the two countries will likely agree to extend their tariff truce, experts worry that a prolonged trade negotiation could hurt the US climate tech advancement. 'The golden rule in business is stability,' Hauber said. 'When you aggregate this volatility and change of decisions and guidance, most people just said: 'I'm going to wait.'' BLOOMBERG
Business Times
an hour ago
- Business Times
PropNex H1 profit doubles to new high of S$42.3 million; declares record interim dividend of S$0.05
[SINGAPORE] Real estate agency PropNex reported a record net profit of S$42.3 million for its first half year ended June 30, more than double from the year-ago period. The 122.4 per cent rise from S$19 million in the first half of 2024 comes as its revenue jumped 73.3 per cent to S$598.9 million from S$345.6 million in the previous corresponding period, based on the company's financial results released on Tuesday (Aug 12). PropNex said the stellar performance was driven by a 7 per cent increase in sales and leasing transactions. The number of new units sold by the company in the first half more than doubled to 4,587 units from 1,889 units previously. Resale private homes transacted rose 11.1 per cent to 7,212 units. However, resale HDB flats clocked in 5 per cent lower at 13,692 units, down from 14,420. Earnings per share stood at S$0.057, up from S$0.025 previously. The company declared an interim dividend of S$0.05 per share, the highest in its history. Interim dividend for the previous comparative period was S$0.0225 per share. The latest payout ratio is 87.6 per cent of net attributable profit with a 4.6 per cent dividend yield based on the counter's share price as at June 30, 2025, PropNex said. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Optimistic outlook PropNex said it remains 'optimistic' about private home sales as there is a gradual recovery in market sentiment. This follows the uncertainty in the market after US President Donald Trump announced his so-called 'Liberation Day' tariffs in April. 'While downside risks persist, the sensitive pricing of homes, moderation in mortgage rates, potential wealth effect from the stock market rebound, and the still tight labour market may boost private housing demand,' said PropNex in a statement. The property group added that improved participation from developers in recent government land sales tenders also reflected their continued confidence in the market. The group forecast a 3 to 4 per cent rise in private home prices in 2025 on the back of 'resilient' demand, healthy household balance sheets, easing interest rates, and 'attractive' new launches. For the full year, it expects to close developer sales of 8,000 to 9,000 units, excluding executive condominiums, while private resale volume is expected to come in at 14,000 to 15,000 units. PropNex said that resale volume for HDB flats is forecast at 27,000 to 28,000 flats, with 4 to 5 per cent gains in the second half of the year due to the stricter loan-to-value limit of 75 per cent for HDB loans, affordability concerns and price resistance from buyers, and new supply from build-to-order and sale of balance flats. 'Buoyed by a record first half and a large, highly-driven salesforce, we maintain our optimism about delivering a strong performance for the full-year of 2025, barring unforeseen events,' said PropNex CEO Kelvin Fong. 'Our playbook continues to focus on investments in technology and training initiatives to boost productivity and support long-term growth.' Shares of PropNex closed Monday 8.78 per cent or S$0.13 up at S$1.61.
