While the decision by OPEC+ members on 3 February to press ahead with plans to increase oil production quotas from April has offered a measure of certainty on future oil volumes, other geopolitical factors, such as potential US decisions on sanctions against Russia and Iran, continue to make the near term crude oil supply and demand outlook difficult to call, Dr Iman Nasseri, Managing Director, Middle East at Facts Global Energy (FGE), told delegates at this week’s Middle East Bunkering Convention in Dubai.
Giving a keynote speech at the top of the conference, which brought together nearly 160 delegates, Dr Nasseri said that FGE’s estimate for demand growth in 2025 is 1.3 million barrels per day (b/d), which is in line with its predictions made for 2024.
‘Anything beyond 1.2 million b/d is considered to be normal demand growth - at least before we reach the demand peak and a declining market,’ he said.
‘The issue is supply – we have about 6-7 million b/d on paper and at least 5 million b/d readily available spare capacity barrels of production which is being kept out of the market waiting for the right time to come back.
From Q2 this year out to Q3 2026, OPEC + has laid out plans to bring back over 2 million barrels b/d of production. This leaves a ‘big gap’ between the target that OPEC+ has set and what the market actually needs, Dr Nasseri highlighted.
While the hope is to keep a balanced market, there are uncertainties on the near horizon.
‘Still less than two weeks of President Trump in office and he has already made lots of disruption [and] lots of moves that have market implications,’ he said. ‘Tariffs on Canada and Mexico were announced and then within a day put on hold, but what we haven’t heard is his policy on Russia and Iran.’
Dr Nasseri also pointed out that Iranian oil production has also bounced back to a level above what it was before President Trump snapped back sanctions on the country in 2018 during his first term of office. Iranian oil exports are also close to pre-sanction levels.
A new ‘policy’ reportedly announced by China’s state-owned Shandong Ports Group in late January has also introduced more uncertainty into the oil supply equation. News agency Reuters has reported that the Group is intending to ban vessels from docking or unloading cargo that are on the US Department of State’s Office of Foreign Assets Control’s list of Russian sanctioned vessels.
Shandong is a major link in the oil supply chain of Iranian and Russian barrels that go to China. However, as Dr Nasseri emphasised, while Shandong would appear to be taking a more hardline stance on sanctioned Russian oil imports, ‘we don’t yet know how it will play out: there’s is a big difference between regulation, policies, and sanctions, and the implementation and execution of those.’
Should Shandong Ports Group put this policy into effect, then this could potentially put 2.5 million barrels of supply at risk, Dr Nasseri noted.
Yet another ‘unknown’ is the compliance of producers of oil producers with supply quotas. ‘Up to 1 million barrels b/d that we have in our outlook can go out of the market if Russia, Kazakhstan and Iraq behave,’ he said. ‘But we don’t think that they will fully comply, let alone deliver compensation packages.’
