Oil prices caught between two risks

There are two factors that are largely beyond the control of Opec+ and they are likely to determine the price of crude oil in the coming weeks.

- Clyde Russell

This file photo, dated May 5, 2025, shows the sun set behind the Dora (Daura) Oil Refinery Complex in Baghdad.

(AFP)

The first is whether US President Donald Trump does decide to start a shooting war with Iran, and if he does whether both sides will be able to keep oil cargoes moving and production infrastructure intact.

The second is whether China, the world’s biggest crude importer, decides to ease back on its recent run of strong imports in light of the 16% jump in benchmark Brent futures in January.

Given the current state of uncertainty gripping crude oil markets it made sense for the eight members of Opec+ with output quotas to make no changes to production policy at their meeting on Sunday.

The eight Opec+ members, which pump about half the world’s oil, raised production quotas by about 2.9 million barrels per day from April through December 2025, roughly 3% of global demand. They then froze further planned increases for January through March 2026 because of seasonally weaker consumption.

In some ways things are moving in favour of the exporter group.

Prices are up, but not high enough to start sparking concerns about renewed inflation and weaker economic growth in importing nations.