The tanker market is unlikely to be significantly affected by OPEC‘s latest decision moving forward. According to shipbroker Gibson’s most recent weekly report, OPEC+ has made the expected choice to extend production cuts for another three months. This decision was based on the current market fundamentals, which do not support further increases in OPEC+ production. In fact, with forecasts indicating a well-supplied oil market in 2025, OPEC+ has opted to slow down the pace of production increases.
As the report explains, there are multiple layers to the ongoing OPEC+ production cuts. The most recent reduction, which amounts to 2.2 million barrels per day (mbd) and was initially implemented in November 2023, will now remain in place until at least April 2025. This cut will be gradually phased back in by September 2026. In addition, an earlier cut of 1.65 mbd, made in April 2023, will be extended through the end of 2026. The 3.7 mbd cut that was implemented in October 2022, however, was not specifically addressed and is expected to stay in effect indefinitely or until OPEC+ revises its policy.
For 2025, the UAE has been given a higher production quota (+300,000 barrels per day), which will be phased in over 18 months starting in April next year. However, production increases could also be limited by compensation cuts for countries that have not met their output targets in the past year, further limiting potential growth in OPEC+ exports. This issue may continue to be sensitive next year, as some OPEC+ countries struggle to control their production levels.
For example, field expansions in Kazakhstan will boost the country’s oil capacity by 260,000 barrels per day in the second quarter of 2025. Additionally, any resumption of oil flows from Kurdistan could impact Iraq’s ability to meet its production targets. As OPEC+ often emphasizes, their strategy is flexible and can be adjusted to reflect changing market conditions.
While the outlook for OPEC+ production in 2025 remains largely unchanged, the shipbroker notes that geopolitical factors could alter the situation. Stricter sanctions on Iran, expected to be implemented next year, could lead to a significant decline in Iranian oil exports, potentially creating an opportunity for other OPEC+ members to increase their production. Similarly, if stricter measures are imposed on Russia’s oil exports, this could also increase the demand for OPEC oil.
So, what does this mean for the tanker market? Overall, the impact is expected to be minimal. Given the supply/demand balance for oil in 2025, further delays in OPEC+ output increases were already anticipated. Therefore, growth in crude tanker demand is expected to be driven mainly by expanding oil production in the Atlantic Basin, which typically generates more tonne-miles than production from the Middle East.
If OPEC+ were to push ahead with production increases, the United States might need to step in as a swing producer, particularly if oil prices were to drop, which could put pressure on long-haul US exports. Additionally, any increase in Russian production would likely benefit the “dark fleet” (tankers not affiliated with mainstream oil markets) rather than the regular tanker market.
Despite the risks associated with a potential market share strategy—where OPEC+ could flood the market with oil—the group has shown remarkable unity in its approach, and for now, this strategy seems unlikely to change.
In conclusion, while geopolitical events and sanctions could shift the oil market dynamics, the tanker market is expected to experience limited direct impact from OPEC’s latest production decision.
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