Dr Carole Nakhle Discusses OPEC+ Strategy on BBC World News

Key takeaways from the interview include:

Why Now?

• When the cuts were initially announced two years ago, they were supposed to last for 3 months only. The time has come to fully unwind them especially in the light of other remaining substantial cuts.
• The decision comes amid stronger seasonal demand, driven by increased travel in the Northern Hemisphere and higher oil use for power generation in the Middle East.
• Despite the planned rise in OPEC+ supply, prices have remained relatively stable — suggesting that markets are absorbing the additional barrels.
• Moreover, since some members had already been overproducing, the announced increase may not translate into a full-volume rise in actual physical supply.
• Broader global sentiment is improving, with positive signals emerging from ongoing tariff and trade negotiations.

Geopolitical Undercurrents

• While the short-term impact of the production hike may soften oil prices, geopolitical risks remain elevated, particularly due to the threat of U.S. secondary sanctions and tighter enforcement of sanctions on Iran.
• Such a threat is causing Indian refiners to rethink their purchases from Russia and look for alternatives such as the Middle East and West Africa.
• At the same time, the OPEC+ increase reduces the group’s spare capacity, limiting its ability to respond flexibly to future disruptions — a strategic trade-off that markets will be watching closely.