00:00Let's just take a look at some of the conflicting reports, it seems, that we got this week.
00:05How are you interpreting the messages that we got from the IEA, OPEC, and more broadly, what we're seeing from the price action of oil?
00:15Well, this trend has been going on for quite some time now.
00:20And if we just consider last year that we were having the same discussion in your program, the divide and the gap between IEA and OPEC forecast in terms of demand, particularly demand growth, was really a wide gap.
00:34And there was a huge confusion in the market.
00:36But we had since, like, in the past month, the past year, sorry, we had particularly a regular trend of revision from IEA data that they keep revising their demand, global demand growth upward.
00:53So as of now that we're talking together, the gap between IEA and OPEC has reduced significantly, and IEA kind of cut up with OPEC.
01:03However, on the other side, if you look at OPEC, the revisions have been very minimal to almost no revisions on their monthly basis.
01:11So, again, we could, if you look at the both comparing them together, we could say that IEA has been playing the catch-up game, and now the gap between them, it's much lower than last year.
01:23But we also had another interesting report and adjustment, and that's by the CNPC, Chinese company,
01:31because obviously the China's demand for oil has been a point of question.
01:38IEA have seen and have been forecasting the Chinese demand, especially for this year, much lower than it actually used to be, it turned out to be.
01:47And CNPC also changed its forecast quite a bit, and now what they're looking is that longer term for higher demand for China.
01:59So, basically, the curve has changed now in the revision, and as Chinese oil is peaking, according to this new revision between 2025 to 2030,
02:10after that, we're not going to see a drop, but rather a plateau.
02:14So, the curve has been changed.
02:16So, we had some quite interesting revisions, but on the OPEC side, there have been a study on the demand side.
02:24On the supply side, also, IEA did some revisions, and they reduced their expectation of supply increase because of the geopolitical factors,
02:37the ongoing war and conflict between Russia and Ukraine, and also the Venezuela issue.
02:42Right. Do you think, Sarah, potentially the market is underpricing some of the risks that those two instances potentially possess for oil more broadly?
02:55Definitely, because the market, when we are talking about market, mostly we are talking about paper market,
03:02which is not a physical barrel, is a lot trading based on sentiments,
03:06and now we have algorithms that are highly sensitive to the news and headlines.
03:10And so, there is this gap between the physical market and actual physical realities on the ground.
03:19So, if you look at it, there are multiple factors.
03:21Yes, as we see that the expectation in the market and the forecast like IEA that, of course,
03:28has impact on the market sentiment has revised its numbers toward a more bullish trend.
03:36But also, we are having a much lower spare capacity when it comes to OPEC and OPEC-plus production,
03:43the threat on physical infrastructure when it comes to Russia, which is a major supplier.
03:49We have another geopolitical factor in Venezuela, and at the same time, very low spare capacity cushion that we have.
03:57And these are all for the short term, because if you look at the long term, then the story is much different for the medium and long term.
04:05Yeah, because there's also the added element of something like AI and data centers, which require more electricity demand.
04:12Sara, what does this all mean, though, for price volatility?
04:14We were mentioning what we're seeing right now, at least from Brent and WTI.
04:18How does this fare for 2026, or heading into 2026?
04:25So, I would say that we should here give some credit to OPEC, because if you look at oil and compare it to many other commodities,
04:32in 2025, it had the much lower volatility, given all the factors we had this year, geopolitical factors, tariffs,
04:41and lots of uncertainties over global economic growth.
04:46However, we could say that OPEC has been steadily both the impact on our sentiments when it comes to producing data and publishing data.
04:57There have been more in terms of data accuracy and how close our data with the realities in the market,
05:03but also the decisions that they have been taking in the past years and even this year.
05:08So, we see that most of the OPEC decisions are mostly market-based and kind of giving certainty to the market when it comes to both sentiments and also the supply.
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