Anas Alhajji: OPEC’s decisions driven by regional demand, not global | Macro Voices

Key Takeaways

• Oil prices in 2025 were expected to remain in the seventies range but fell below expectations.
• OPEC’s decision to unwind production cuts was based on demand for their own oil, not global demand.
• The bearish sentiment regarding oil supply was proven incorrect.
• An increase in oil on water does not necessarily indicate an increase in actual oil supply.
• Chevron is the primary loser in the recent disruptions to Kazakhstan’s oil exports.
• OPEC does not believe in the massive surplus that the International Energy Agency is discussing.
• Iran’s natural gas exports to Iraq were halted due to a snowstorm, increasing Iraq’s oil consumption.
• The reported surplus of oil does not exist due to significant production declines.
• Demand for oil is expected to increase during the holy month of Ramadan.
• Saudi Arabia’s oil production increase is driven by rising domestic demand due to religious events.
• OPEC’s perspective on oil supply levels diverges from the International Energy Agency’s reports.
• Weather events can have a direct impact on energy supply chains and oil consumption.
• Geopolitical events can have unexpected impacts on major oil companies like Chevron.
• Seasonal demand fluctuations in the oil market are influenced by cultural events.
• Saudi Arabia prepares its inventories for increased demand during religious events.

Guest intro

Dr. Anas F. Alhajji is a Managing Partner at Energy Outlook Advisors LLC and former Chief Economist of NGP Energy Capital Management, where he led macro-analysis of oil, natural gas, and related markets. He is a world-renowned energy economist and researcher with more than 900 papers, articles, and columns to his credit, with specialization in oil and gas market outlook, energy geopolitics, and energy security. Dr. Alhajji holds a PhD in Economics from the University of Oklahoma and has taught energy economics and policy at multiple universities, including the Colorado School of Mines and Ohio Northern University.

OPEC’s decision-making and oil demand

• What I missed was… they looked at the growth and demand for their own oil not for the global oil demand

  — Anas Alhajji

• OPEC’s production decisions are influenced by regional demand rather than global demand.

• The demand for them for their oil was increasing because of the sanctions

  — Anas Alhajji

• Understanding OPEC’s decision-making requires knowledge of geopolitical factors.
• OPEC’s actions are often misinterpreted as responses to global demand.

• Oil prices were expected to remain in the seventies range in 2025

  — Anas Alhajji

• The distinction between regional and global oil demand is crucial for market analysis.
• OPEC’s production cuts are often based on assessments of their own oil demand.

Misconceptions about oil supply

• The bearish sentiment regarding oil supply was unfounded and has been proven incorrect

  — Anas Alhajji

• An increase in oil on water does not equate to an increase in actual supply.

• We ended up with more oil on water but actual supply declined

  — Anas Alhajji

• Media narratives often misinterpret oil supply metrics.

• The increase in oil on water basically is going to be bearish and it wasn’t

  — Anas Alhajji

• Understanding oil supply dynamics requires knowledge of transportation versus production.
• The International Energy Agency’s claims about oil supply can be misleading.

• The reported surplus of oil does not actually exist due to significant production declines

  — Anas Alhajji

Geopolitical impacts on oil markets

• Chevron is significantly affected by disruptions in Kazakhstan’s oil exports.

• The primary loser is Chevron not Kazakhstan government it’s Chevron

  — Anas Alhajji

• Geopolitical events can have unexpected impacts on major oil companies.
• The role of Chevron in Kazakhstan and Venezuela highlights geopolitical complexities.
• Understanding the geopolitical implications of oil exports is crucial for market analysis.
• Disruptions in oil exports can have significant financial impacts on companies like Chevron.

• Chevron is the primary loser in the recent disruptions to Kazakhstan’s oil exports

  — Anas Alhajji

• Analyzing geopolitical events requires knowledge of oil market dynamics.

OPEC’s perspective on oil surplus

• OPEC does not believe in the massive surplus discussed by the International Energy Agency.

• From OPEC point of view they don’t believe in the massive surplus that the IAEA is talking about

  — Anas Alhajji

• OPEC acknowledges a seasonal surplus, which has declined.
• Understanding OPEC’s perspective requires knowledge of global oil supply dynamics.

• They do believe in the seasonal surplus and that seasonal surplus declined

  — Anas Alhajji

• OPEC’s views often diverge from international reports on oil supply.
• The International Energy Agency’s reports may not align with OPEC’s assessments.
• OPEC’s perspective is crucial for understanding global oil market trends.

Weather impacts on energy supply

• Iran’s natural gas exports to Iraq were halted due to a snowstorm.

• Because of that storm Iran’s natural gas exports to Iraq stopped

  — Anas Alhajji

• Iraq had to burn more oil for power generation due to the halt in gas exports.
• Weather events can have a direct impact on energy supply chains.

• Iraq got stuck how they are going to provide power generation to their population

  — Anas Alhajji

• The halt in gas exports led to increased oil consumption in Iraq.
• Understanding the impact of weather on energy exports is crucial for market analysis.

• The only way they can do that is if they burn more oil

  — Anas Alhajji

Seasonal demand fluctuations

• Demand for oil is expected to increase during the holy month of Ramadan.

• We do have enough evidence to show that energy demand during the month of Ramadan increases

  — Anas Alhajji

• Saudi Arabia’s oil production increase is driven by rising domestic demand due to religious events.

• If you look at Saudi Arabia they are preparing their inventories

  — Anas Alhajji

• Religious events like Ramadan and Hajj significantly impact oil demand in Saudi Arabia.

• The demand during the summer for oil increases by about 1,000,000 barrels a day

  — Anas Alhajji

• Understanding seasonal demand fluctuations requires knowledge of cultural events.
• Saudi Arabia prepares for increased demand during religious events by adjusting oil production.

Divergence between OPEC and IEA

• OPEC’s perspective on oil supply levels diverges from the International Energy Agency’s reports.

• OPEC does not believe in the massive surplus that the International Energy Agency is discussing

  — Anas Alhajji

• The International Energy Agency’s claims about oil supply are often challenged by OPEC.
• OPEC acknowledges a seasonal surplus, which has declined, contrary to IEA’s reports.
• Understanding the divergence between OPEC and IEA requires knowledge of global oil supply dynamics.
• OPEC’s views provide a different perspective on global oil market trends.
• The International Energy Agency’s reports may not align with OPEC’s assessments.
• Analyzing the divergence between OPEC and IEA is crucial for market analysis.

Impact of cultural events on oil demand

• Saudi Arabia’s oil production increase is driven by rising domestic demand due to religious events.

• We are going to see probably record numbers coming to Saudi Arabia during the month of Ramadan

  — Anas Alhajji

• Religious events like Ramadan and Hajj significantly impact oil demand in Saudi Arabia.

• The demand during the summer for oil increases by about 1,000,000 barrels a day

  — Anas Alhajji

• Understanding the impact of cultural events on oil demand is crucial for market analysis.
• Saudi Arabia prepares for increased demand during religious events by adjusting oil production.
• Cultural events can lead to significant fluctuations in oil demand.
• Analyzing the impact of cultural events on oil demand provides actionable insights for market participants.