- OPEC+ extended production cuts until April 2025 amid well-supplied market fundamentals.
- Geopolitical shifts and non-OPEC supply growth may affect the oil landscape in 2025.
- Tanker market impacts remain limited, with regional dynamics shaping freight rates.
OPEC+ has announced an extension of its production cuts, reflecting cautious market fundamentals and subdued global demand. This decision aligns with expectations and maintains a controlled approach to oil production. Below, we explore the specifics of OPEC+ strategies and their implications for the tanker market, reports Gibson.
OPEC+ Production Policy
OPEC+ extended its 2.2mbd production cut until April 2025, with gradual increases expected by September 2026. Additional cuts of 1.65mbd from April 2023 remain until the end of 2026.
UAE Adjustments
The UAE will see a phased quota increase of 300kbd starting April 2025 over 18 months, while compliance issues among members like Kazakhstan and Iraq may pose challenges.
Market Dynamics
Non-OPEC supply growth, particularly in the Atlantic basin, may limit opportunities for OPEC+ production increases, barring geopolitical disruptions such as stricter sanctions on Iran or Russia.
VLCCs in Decline
Freight rates remain weak in the East, with limited activity and downward pressure on rates. Atlantic basin demand for tonne miles is more promising.
Suezmax and Aframax Trends
Suezmax rates remain under pressure in key regions like West Africa and the Mediterranean, though selective opportunities exist. Aframaxes are seeing a surge in the US Gulf, supported by regional demand dynamics.
Clean Tanker Activity
Larger clean tankers like LRs showed signs of recovery in the East, while MR tankers in Europe experienced limited activity despite some late-week tightening of availability.
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Source: Gibsons
