OPEC+ vs Trump: why oil prices are not falling and what does it concern the threat against Russia?

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to Forbes on OPEC+'s decision to accelerate the lifting of additional voluntary production restrictions and Russia's prospects for increasing production.

The decision to increase production by the same amount as in August indicates that OPEC+ is consistently pursuing a policy of accelerated withdrawal from additional voluntary restrictions, Alexey Gromov explained.

"In general, OPEC+ solves two tasks in this way," he notes. — The first is the restoration of market share. In addition, this is how OPEC+ helps countries that have exceeded their production quotas to quickly close violations. This applies primarily to Kazakhstan, which is probably having the biggest problems with meeting the agreed OPEC+ quota right now."

OPEC+ is not risking much by increasing production, as this is happening during a period of still high seasonal global oil demand, which allows prices to react relatively weakly, Gromov believes. In addition, prices are supported by the geopolitical component: the United States is signaling that additional difficulties with Russian oil supplies are possible after August 8.

The United States is trying to increase pressure on Iran, a major oil exporter, which refuses to negotiate with the United States, which also creates tension in the oil market. The actions of the United States are pushing prices up, while the actions of OPEC+, on the contrary, are pushing prices down.

"I assume that China will be the least susceptible to US sanctions pressure," Gromov notes. — The proof of this is the experience of China's purchase of Iranian oil despite the severe pressure from the United States. I think the situation will be similar with Russia. China is categorically not interested in reducing purchases of Russian oil and does not intend to show any weakness. He will try to shift Russian oil supplies as much as possible to the most reliable transportation channels, primarily pipelines."

The situation with India is more complicated, Gromov believes. In his opinion, India will not be able to completely abandon Russian oil, but where possible, Russian imports will be replaced by supplies from other countries, primarily from the Middle East and West Africa.

According to Gromov, Turkey is also vulnerable to US sanctions pressure. Since some Turkish ports refused to accept tankers of the shadow fleet after the imposition of sanctions against them, the expert admits that a similar reaction from Turkey is possible if Trump imposes sanctions against the country on August 8.