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First Post
5 days ago
- Business
- First Post
The 'drill, baby, drill' that has kept oil prices low, and it's not all about Trump
Per the promise of 'Drill, baby, drill', the price of oil has indeed tanked, and drilling has increased somewhat…but in parts of the world that are not the US, that is. Trump has a hand in it, but he's far from the main character in this game read more Oil prices have decreased, in part due to "Drill, baby, drill" strategy by OPEC+ nations. It's not all because of Trump, though. AI-generated image Immediately after Trump took office as the President of the United States for the second time in January this year, he proclaimed 'Drill, baby, drill' as one of the top agendas of his administration. The Republican vowed an oil drilling boom that he claimed would make the US more 'energy independent' and lower voters' spending at the gas station. The price of oil has indeed tanked, and drilling has increased somewhat…in parts of the world that are not the US, that is. STORY CONTINUES BELOW THIS AD The 'Drill, baby, drill' that is keeping oil prices low has got to do way more with actions being taken by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) than Trump. OPEC+ on Sunday (August 3) concluded a two-year drive to restore oil output that had been slashed during the pandemic-era demand collapse. But instead of clarity for markets, the group has left traders navigating a thicket of uncertainty, and prices under mounting pressure. The latest decision, a 547,000 barrel-a-day increase, reverses the final segment of the bloc's 2023 voluntary cutbacks. It completes, one year ahead of schedule, a strategic pivot by Saudi Arabia and its allies toward reviving lost market share. Yet another 1.66 million barrels per day remain idled and are unlikely to return before late 2026, unless OPEC+ changes course. The move follows months of softening oil prices, driven not only by the bloc's aggressive production policy but also by a broader resurgence in global supply, particularly from non-OPEC producers. In North and South America, output gains are reshaping market dynamics in ways that neither Riyadh nor Moscow can fully control. 'The group is still threading a fine needle,' said Jorge Leon, senior vice-president at Rystad Energy and a former OPEC official. 'On one side, there's Trump's pressure on prices. On the other, there's the cohesion of the alliance to consider , particularly as the Russia-Ukraine conflict complicates every equation.' America's silent surge Though US President Donald Trump has taken credit for easing oil prices, the reality is more complex. According to analysts at the International Energy Agency, US production has steadily crept upward in 2025 despite tepid economic signals and a cooling labour market. This expansion , along with growing output in Brazil and Guyana , has contributed to what the IEA projects as a fourth-quarter global surplus of 2 million barrels per day. Brent crude, the international benchmark, has fallen 6.7 per cent since January, to just above $70 per barrel. Goldman Sachs expects a further slide toward $60, levels well below what Saudi Arabia needs to balance its budget. STORY CONTINUES BELOW THIS AD At the same time, Trump's renewed trade war and tariff escalations have dampened demand expectations. The twin impact , higher supply and slower growth , has weighed on futures, leaving OPEC+ in a quandary over whether to keep pumping or pull back again. Market share versus market stability In theory, the group could now pause. A meeting scheduled for September 7 may serve as a checkpoint, particularly if weak macroeconomic data continues to weigh on demand. Analysts at JPMorgan and Goldman Sachs expect a production freeze rather than another boost. Several crude traders surveyed by Bloomberg also predict a cautious holding pattern. But Saudi Arabia's ambitions may not align with that view. 'Ultimately, market share is now the name of the game.' said Harry Tchilinguirian, research chief at Onyx Capital Group. 'The Saudis won't want to sit on spare capacity if others are capturing customers.' This calculus is especially salient given mounting diplomatic friction between the US and Russia. Last week, Trump threatened secondary sanctions on Moscow's oil buyers, in an effort to force a ceasefire in Ukraine. In response, Russian Deputy Prime Minister Alexander Novak travelled to Riyadh for a rare meeting with Saudi energy minister Prince Abdulaziz bin Salman , a gesture meant to reinforce unity under pressure. Yet the optics belie the deeper tension. If the US moves to isolate Russian crude further, Riyadh may find itself torn between alliance loyalty and an opening to expand its own sales , even at the cost of further undercutting prices. STORY CONTINUES BELOW THIS AD A tough ropewalk for OPEC+ '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 favorable, I think further unwinding of cuts should be expected.' For now, the group appears to be betting that the oil market will tighten again in 2026, when the remaining 1.66 million barrels per day could be reintroduced under more favourable conditions. Trump's tariffs may have accelerated the downward price spiral, but the more durable forces keeping oil under $75 are structural: supply growth in the Americas, a cooling Chinese economy, and OPEC's own shift toward short-term tactical moves.
New Straits Times
16-07-2025
- Business
- New Straits Times
Oil prices gain on demand expectations amid improving economy
BEIJING: Oil prices rose on Wednesday on expectations of steady demand in the US and China, the world's two largest oil users, amid an improving economic outlook. Brent crude futures rose 29 cents, or 0.42 per cent, to US$69 a barrel by 0105 GMT. US West Texas Intermediate crude futures were up 40 cents, or 0.6 per cent, at US$66.92. That reversed two days of declines as the market downplayed the potential for supply disruptions after US President Donald Trump threatened tariffs on purchases of Russian oil. Prices have seesawed in a fairly tight range as signs of steady demand from an increase in travel during the Northern Hemisphere summer has competed with concerns US tariffs on its trading partners will slow economic growth and fuel consumption. However, major oil producers are pointing to improvement in economic growth for the second half of the year and Chinese data showed growth there remained consistent. "Strong seasonal demand is currently providing upward momentum to oil prices, as summer travel and industrial activity peak," LSEG analysts said in a note. "Increased gasoline consumption - especially in the US during the Fourth of July holiday period - has signaled robust fuel demand, helping offset bearish pressures from rising inventories and tariff concerns." China data showed growth slowed in the second quarter, but not by as much as previously feared, in part because of frontloading to beat US tariffs. That eased some concerns about the economy of the world's largest crude importer. The data also showed that China's crude oil throughput in June jumped 8.5 per cent from a year earlier, indicating stronger fuel demand. That was the highest since September 2023, as state-owned refineries increased operations and saw a recovery in profit, consultants said. Additionally, the Organisation of Petroleum Exporting Countries (OPEC) forecast in a monthly report on Tuesday that the global economy would do better in the second half of the year, boosting the oil demand outlook. India, China and Brazil are outperforming expectations while the US and EU are recovering from last year, the report said.
Daily Maverick
04-06-2025
- Automotive
- Daily Maverick
Loaded for Bear: Would left turns on red lights safely cut SA's fuel usage?
One of the many upshots of the Arab oil embargo in 1973 — aside from stagflation and the beginning of the end of blue-collar prosperity — was that it triggered a major traffic reform in North America: the right turn on right light or RTOR. In 1973, Arab members of the Organisation of Petroleum Exporting Countries (Opec) imposed an embargo on the US because of its support for Israel during the Yom Kippur War. Canada was also hit hard by this embargo, and I can recall from my childhood in Nova Scotia sitting with my parents in long queues at petrol stations. One of the many upshots of this drama — aside from stagflation and the beginning of the end of blue collar-prosperity — was that it triggered a major traffic reform in North America: the right turn on right light or RTOR. The thinking behind it was that it would save on the consumption of petrol — or gas as it is called in North America — by allowing motorists to make a right turn on a red light if the coast was clear rather than waiting another 20 or 40 or 60 seconds while their engine idled. For a single outing to work or the grocery store or wherever, that would not amount to much. But multiplied millions or tens of millions of times per day, savings were seen to be had in a time of chronic shortages and soaring prices. The Energy Policy and Conservation Act of 1975 required states to allow right turns on red lights to be eligible for federal assistance for mandated conservation programmes. It was an energy-saving and green policy at a time when even Republicans were not opposed to environmental regulations. Straightforward The rules are pretty straightforward. If you want to turn right you treat the red light as a stop sign, coming to a complete stop and making sure there is no traffic coming from your left before proceeding. At some intersections, a sign will say that right turns on red lights are not allowed at certain times of the day such as during rush-hour traffic. North Americans of course drive on the right-hand side of the road, so in South Africa such a reform would allow for left turns on red robots. When this correspondent first came to South Africa in 1998, it took me a while to realise that I was not, in fact, allowed to make a left turn when the light was red. So, would such a reform be sensible in South Africa? South Africa does not face a crisis in petrol supplies — at least, not yet! — and declining fuel prices have been a key driver of slowing inflation, though the fuel levy hike will arrest that promising trend somewhat. But every drop counts and South Africa also needs to reduce its emissions of the greenhouse gases that are fuelling rapid climate change. It must be said that in North America there has been some questioning of this rule of the road on both fuel saving and safety grounds. One 2024 study by researchers at the Mineta Transportation Institute at San Jose State University found that '… RTOR movements are generally unsafe for pedestrians, bicyclists, and drivers, while only marginally useful in lowering emissions and only under certain contexts. Those marginal benefits may further decline with increased electric vehicle (EV) adoption.' Given the carnage on South Africa's roads, policy makers would need to think twice about introducing a measure that would make driving even more treacherous. Dangerous and reckless driving There is a lot of dangerous and reckless driving in South Africa, and minibus taxi drivers spring immediately to mind. How many of them would come to complete stops and make sure it is safe to execute a left turn at a red robot? I am guessing not that many and they are hardly the only menace on South Africa's roads. Also, to make a left turn on a red robot you need functioning robots in the first place. Many South African drivers don't seem to get the point that a traffic light that is not working at an intersection — a frequent occurrence — should be treated like a four-way stop. Such situations are often treated like a game of chicken and chaos, horns blaring, middle-fingers extended and road rage are often the result. Imagine the stoners who try to make a buck out of this chaos by 'directing' traffic when the robots die trying to also navigate a left turn rule. Still, I often grow impatient when I am at a functioning robot and could safely turn left but am prohibited from doing so. (Full disclosure — I sometimes do it. I did learn to drive in Canada.) I am sure many South African motorists feel the same. But come to think of it, given how the rules of the road in South Africa are so frequently violated, maybe the left turn on the red light is fairly common anyway. And maybe, some day, South African motorists will be overwhelmingly careful and law abiding, allowing for a left turn at a red light to be made legal with relative safety. I don't think EVs are going to rule the roads here any time soon and fuel needs to be saved — and greenhouse gas emissions slashed — by hook or by crook. DM
The Star
27-05-2025
- Business
- The Star
Oil falls as higher OPEC+ output expectations weigh on sentiment
Oil prices slipped for a second session on Tuesday on increasing expectations members of the Organisation of Petroleum Exporting Countries and their allies, known as OPEC+, will decide to increase their output at a meeting later this week. Brent crude futures shed 24 cents, or 0.4%, to $64.50 a barrel by 0507 GMT, while U.S. West Texas Intermediate (WTI) crude was down 29 cents, or 0.5%, at $61.24 a barrel. The WTI contract did not settle on Monday because of the U.S. Memorial Day holiday. "Crude oil edged lower as the market contemplated the outlook for rising OPEC supply," Daniel Hynes, senior commodity strategist at ANZ, said in a note. OPEC+ will likely finalise July output at their meeting, which sources have previously told Reuters will entail a production increase of 411,000 barrels per day. Russian Deputy Prime Minister Alexander Novak said on Monday that OPEC+ had yet to discuss hiking output. The group is likely to finalise output quotas in an online ministerial meeting on May 28. Eight OPEC+ members that had pledged additional voluntary cuts are now expected to meet on May 31, one day earlier than previously scheduled, three sources within the group told Reuters on Monday. OPEC+ members had already agreed to accelerate oil output increases for a second month in June. However, U.S. President Donald Trump's decision to extend trade talks with the European Union until July 9 alleviated immediate fears of tariffs that could suppress fuel demand, placing a lid on losses. Iran set the official selling price for its light crude oil grade for Asian buyers at $1.80 a barrel above the Oman/Dubai average for June, the state-owned National Iranian Oil Company (NIOC) said. The price it set for May was a premium of $1.65. Iranian President Masoud Pezeshkian said on Monday that Iran would be able to survive if negotiations with the U.S. over its nuclear programme fail to secure a deal. If nuclear talks between the U.S. and Iran fail, it could mean continued sanctions on Iran, which would limit Iranian supply and be supportive of oil prices. - Reuters
Business Recorder
27-05-2025
- Business
- Business Recorder
Oil little changed as higher OPEC+ output expectations weigh on sentiment
Oil prices were little changed on Tuesday on increasing expectations members of the Organisation of Petroleum Exporting Countries and their allies, known as OPEC+, will decide to increase their output at a meeting later this week. Brent crude futures were up 11 cents, or 0.2%, at $64.85 a barrel by 0640 GMT, while US West Texas Intermediate (WTI) crude rose 6 cents, or 0.1%, to $61.59 a barrel. The WTI contract did not settle on Monday because of the US Memorial Day holiday. 'Crude oil edged lower as the market contemplated the outlook for rising OPEC supply,' Daniel Hynes, senior commodity strategist at ANZ, said in a note. OPEC+ will likely finalise July output at their meeting, which sources have previously told Reuters will entail a production increase of 411,000 barrels per day. Russian Deputy Prime Minister Alexander Novak said on Monday that OPEC+ had yet to discuss hiking output. The group is likely to finalise output quotas in an online ministerial meeting on May 28. Eight OPEC+ members that had pledged additional voluntary cuts are now expected to meet on May 31, one day earlier than previously scheduled, three sources within the group told Reuters on Monday. OPEC+ members had already agreed to accelerate oil output increases for a second month in June. However, US President Donald Trump's decision to extend trade talks with the European Union until July 9 alleviated immediate fears of tariffs that could suppress fuel demand. Oil steadies after Trump extends EU trade talks deadline Iran set the official selling price for its light crude oil grade for Asian buyers at $1.80 a barrel above the Oman/Dubai average for June, the state-owned National Iranian Oil Company (NIOC) said. The price it set for May was a premium of $1.65. Iranian President Masoud Pezeshkian said on Monday that Iran would be able to survive if negotiations with the US over its nuclear programme fail to secure a deal. If nuclear talks between the US and Iran fail, it could mean continued sanctions on Iran, which would limit Iranian supply and be supportive of oil prices.
