OPEC+ just made the Fed’s job more complicated. Here’s why they did it — and what could be next
The logo of the OPEC is pictured at the OPEC headquarters on October 4, 2022. In October last year, the oil cartel announced its decision to cut output by two million barrels per day.
Joe Klamar | Afp | Getty Images
Several OPEC+ members are set to tighten global production by an additional 1.16 million barrels per day until the end of the year, further burdening central bank efforts to curtail global inflation — but critically protecting the alliance’s broader output strategy from political pressures.
Washington has stepped in to criticize Sunday’s announcement where eight OPEC+ producers — including group leader Saudi Arabia and key allies Kuwait and the UAE — said they would remove more than a combined 1 million barrels per day from global oil markets, as part of an independent initiative unlinked to the broader OPEC+ policy.
This adds to Russia’s existing intentions to trim 500,000 barrels per day of its own production from February output levels, now until the end of the year — bringing the combined voluntary cuts of OPEC+ members in excess of 1.6 million barrels per day.
“We don’t think cuts are advisable at this moment, given market uncertainty — and we’ve made that clear,” a spokesperson for the National Security Council said, according to Reuters.
U.S. President Joe Biden’s administration has repeatedly lambasted the OPEC+ group for its production cuts, citing the inflationary toll on households and flinging accusations of camaraderie with sanctions-struck Russia. Curbs in production lead to smaller supply, causing higher prices at the pump in importing countries which then provides a boost for headline inflation figures.
Relations devolved into a war of words with OPEC+ chair Saudi Arabia at the end of last year, when the oil group agreed a 2 million barrels per day cut until the end of 2023 — a decision upheld at ministerial and technical committees since.
One such technical council, the OPEC+ Joint Ministerial Monitoring Committee concluded on Monday with a statement that acknowledged the voluntary cuts, making no mention of a broader change in formal production policy.
Referring to the voluntary cuts, the OPEC Secretariat said they represent “a precautionary measure aimed at supporting the stability of the oil market.”
The JMMC will next convene on June 4, with a full ministerial meeting to follow.
Formal group action is arguably no longer required, with front-month June Brent futures prices up by $4.44 per barrel from the Friday settlement to $84.33 per barrel at nearly 10 a.m. London time. Some analysts now warn of prices soaring to $100 per barrel, while Goldman Sachs could drive up Brent forecasts by $5 per barrel to $95 per barrel for December 2023.
“The anticipated increase in oil prices for the rest of the year as a result of these voluntary cuts could fuel global inflation, prompting a more hawkish stance on interest rate hikes from central banks across the world. That would, however, lower economic growth and reduce oil demand expansion,” said Victor Ponsford of Rystad Energy in a research note.
Tamas Varga, of oil broker PVM, flagged the broader political risks of the organized voluntary cuts, telling CNBC that headline inflation should rise faster than anticipated.
“But central banks might not deviate from the course of slowing down the hike in borrowing as their views are chiefly shaped by core inflation figures, which will not be as much affected by stronger oil prices as headline data,” he said.
“The voices of the proponents of the NOPEC bill in the US Congress will also get louder and they will accuse OPEC+ to use oil as a weapon. The step is unreservedly bullish, for now macro worries are overtaken by supply concerns. The move will also lead to further souring of the Saudi-US relationship.”
The NOPEC — No Oil Producing and Exporting Cartels— bill refers to proposed U.S. legislation that would open OPEC+ countries to potential antitrust legal action.
The U.S. can attempt to combat price hikes by releasing further volumes from its Strategic Petroleum Reserves — with one anonymous OPEC+ delegate saying that Washington has encumbered its fight against inflation by blocking global access to Venezuela and Iranian volumes, while EU nations likewise refrain from Russian purchases out of solidarity with the invaded Ukraine.
OPEC+ delegates have previously also found fault with western nations’ windfall taxes on energy companies — which they claim received no consistent support when WTI futures traded in negative territory in April 2020 — and with the accelerated shift toward renewables that has reduced hydrocarbon investments without producing sufficient alternative green fuel to fully meet consumer demands.
Spare capacity has been at the heart of recent OPEC+ pronouncements, with the group stepping in to protect the appeal of stable return for long-term investments in oil projects. Nearly all of the countries participating in the recently-announced independent cuts possess additional capacity.
One anonymous OPEC+ source said discussions to coordinate further independent cuts gained traction toward the end of last week, when volatility in the banking sector following the failures of several U.S. and Swiss lenders eroded investor confidence in more historically volatile assets, such as oil. OPEC+ delegates have previously expressed that the oil impact of the banking turbulence would be short-lived, with longer-term questions lingering over the looming demand of a reopening China, the world’s largest consumer.
“What happened to the oil prices over the last three weeks was nothing to do with oil factors, it was everything to do with the banking crisis, and the fears that brings with it. We also had a huge, huge increase in [the] short market, and that is something that OPEC are very keen to stomp out,” Amrita Sen, co-founder and director of research at Energy Aspects, told CNBC’s Dan Murphy.
Investors generally assume short positions when they expect market or price declines.
“I do believe, if the market overtightens, or exogenous issues or shocks fade, they will reverse this cut along the line. So this isn’t set in stone for the rest of the year, but very clearly defending a floor.”
Voluntary production moves are easier to agree and unwind without staining domestic or external OPEC+ politics. Such cuts have previously been accepted by the group, provided they aligned with the spirit of existing OPEC+ policies — but they have typically expressed the initiative of a single country, barring temporary Saudi-Kuwaiti-UAE reductions organized during the Covid-19 pandemic.
A coordinated gesture of Sunday’s scale effectively creates a second, unofficial agreement on top of the existing formal OPEC+ strategy — one that does not command formal commitments and can be more readily defended when individual oil ministries face pressures from their own governments or state oil companies to increase output and short-term revenues. Independent cuts also bypass the need for unanimous OPEC+ member approval and tentatively avoid external accusations of organized anti-consumer behavior.
But the gesture will not bridge the growing political rift between OPEC+ kingpin Saudi Arabia and the Biden administration, whose influence has been increasingly supplanted by China in the Middle East. In the past month, Beijing brokered a resumption of relations between arch-rivals Tehran and Riyadh, with Saudi Arabia also taking steps to join the China-led Shanghai Cooperation Organization as a dialogue partner.
“[The organized voluntary cuts] certainly would play into the narrative that the U.S. is losing its influence in the region to either influence the actions of core OPEC producers like Saudi Arabia and the UAE, which have traditionally been client states of the U.S.,” Andy Critchlow, EMEA head of news at S&P Global Platts, told CNBC.
“You can’t really look at this in isolation from the wider geopolitical situation in the Middle East, which is seeing these core oil producers shift closer to China, shift much closer to Russia. You know, they like operating in this multipolar world, instead of being completely tied to U.S. dependency.”
BYD is taking a page from the Airbnb playbook by launching a home charger sharing system that lets EV owners open up their personal charging equipment to other BYD drivers — and get paid for the convenience.
Instead of waiting for utilities or charging networks to build out more public infrastructure, BYD is effectively crowdsourcing existing capacity from home chargers its customers have already installed, turning underused residential charging equipment into a shared resource while its owner is at work or away.
Also like Airbnb, the app allows the charger’s owner and user to settle the pricing and availability and other transaction details between themselves, with contact information and messaging also going through the app.
Great, if not totally unique idea
BYD’s system seems to be more polished and, thanks to the integrated card reader, a bit more accessible than similar concepts from Nio and XPeng. XPeng’s system allows charger owners to set different electricity prices at different times (ex.: off-peak electricity at 0.35 yuan/kWh, significantly lower than peak), to cover their electricity costs.
The XPeng system also only seems to support automatic payment through the app, as opposed to the BYD system that bakes a card reader right in.
Electrek’s Take
I don’t know enough about the public charging scene throughout China – a massive country half a world away – to know how much of a need this is serving, but here in the US, I seem to recall that this was more or less PlugShare’s original concept, and could easily imagine a half-dozen scenarios outside of an Airbnb where a simple, app-based system like this could play out positively for both the EV driver and the equipment owner.
Multifamily apartments or condos with deeded spaces, churches, schools, municipal buildings, or other spaces that sit empty most days could be great uses for this, and I bet you guys could think of two or three more. I look forward to hearing about them, and whether or not a brand-specific network could help move the needle for a brand like Harley or Jeep that’s struggling with its EVs, in the comments.
SOURCE | IMAGES: BYD, via CarNewsChina.
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![Maximizing fleet efficiency and ROI with telematics integration [update]](https://i0.wp.com/electrek.co/wp-content/uploads/sites/3/2023/11/Daimler-North-America-semi-electric-trucks.jpg?resize=1200,628&quality=82&strip=all&ssl=1)
Even without clean fleet tax credits and cash-on-the-hood incentives, fleet managers are working hard to maximize their ROI on vehicle assets and reduce their total cost of ownership – and they’re increasingly turning to data‑driven telematics solutions to help.
Telematics use data gathered from sensors embedded in a vehicle to monitor its operations. When collected and interpreted correctly, that data can be used to improve fleet safety, boost operational efficiency, and enable predictive maintenance that reduces (if not eliminates) unexpected downtime. Those are real benefits, with some analysts showing up to 30% savings in repair costs even before you factor in the fuel savings from EVs that, according to MAN CEO Alexander Vlaskamp, will cover the added cost of a BEV in less than three years.
As you can imagine, that’s a big business – and the global market for vehicle telematic platforms is projected to reach an impressive $127 billion in the next decade, and the rush is on to get OEMs like Ford (through Ford Pro) and Volvo (who has a deal with Geotab) to integrate digital solutions into their vehicles.
We originally covered these topics back in February, ahead of the ACT Expo. You can read that original article, below, and let us know what you think of the OEMs’ telematics’
Last month, Geotab signed a deal with Volvo Group to integrate the manufacturer’s vehicle data API into Geotab’s telematics platform. It’s the latest in a recent onslaught of such deals between telematics providers and OEMs that begs the question: what’s in it for the OEMs?
Almost all modern cars and trucks are “connected” in some way. Ford, for example, began fitting the FordPass Connect modem on all its vehicles in the 2020 model year, and the vehicle (and driver) data gathered powers the Ford Pro fleet management platform and enables offerings like the company’s E-Switch Assist, which enables Ford fleet managers to identify which of its ICE-powered F-150 and Transit assets are ready to make the switch to EV.
“Smart tools informed by data like E-Switch Assist are opening up many new conversations with our commercial customers large and small about EV readiness; we’re already using E-Switch Assist regularly in consultations to help organizations determine if electric trucks and vans are right for them,” says Nate McDonald, EV strategy and cross vehicle brand manager at Ford Pro. “The importance of these tools and technologies goes beyond selling a customer a new vehicle—it changes mindsets about whether electric vehicles will work for their business while potentially saving them time and money.”
So, it makes sense for manufacturers to build that connectivity into their vehicles and makes even more sense to use that data connection to populate a fleet management dashboard that makes it painless for fleet managers to monitor their assets within a trusted ecosystem. Think Android vs. iPhone, and the pain that would go into switching from one to the other after a decade or so of constant interaction – because that’s how the OEMs are looking at it.
Why, then, would an OEM open up that data stream to a third party like Geotab?
The answer, presumably, is that that data sharing is a two-way street: the manufacturer’s are opening up their APIs to Geotab, and Geotab is sharing at least some of the data from other manufacturers with their industry partners.
And Geotab has a lot of partners:
- In 2019, Geotab began working with Ford to integrate Ford’s telematics data into its fleet management platform
- In 2020, Geotab began integrating with GM and its OnStar telematics in North American markets
- In 2022, Geotab began partnering with Stellantis’ Free2move car sharing brand, providing full telematics integration into the MyGeotab platform in North America
- In April of 2024, Geotab partnered with Mobilisights to integrate data from Stellantis’ European brands, including Opel, Fiat, Alfa Romeo, Citroën, and Peugeot
- In September of 2024, Geotab announced a new partnership with VW Group Info Services aimed at improving the company’s data integration across its brands
- A deal with Rivian, VW’s partner in a $5 billion joint software venture, followed soon after
All of those players are convinced that the data coming from their vehicles can produce enough value to seriously impact fleet ROI.
Fleet managers seem convinced, too. In a recent McKinsey survey, nearly 57% of EV buyers said they were willing to switch brands in order to get better connectivity features. And, if you’ve ever worked in “a Ford shop” or “a Chevy shop” you already know what a huge that deal that number might be to an OEM.
McKinsey connectivity survey
In that point of view, working with a trusted, universal platform like Geotab who doesn’t have a dog in the vehicle sales fight makes sense. If the Ford Transit the fleet buyer is looking at plays well with their fleet auditing software and systems and the Nissan NV doesn’t – well, it doesn’t really matter if Nissan’s fleetail guy is giving you a better deal at that point. It’s just too painful to operate a second dashboard for one subset of assets.
The man-hours saved with a universal and brand agnostic fleet management platform may not be the easiest to trace all the way to the bottom line, but they’re there.
Additionally, the Geotab dashboard can be configured to collect and even analyze data that’s specifically relevant to EVs. Information like charging history, and regenerative braking efficiency, and overall battery health – data that, over thousands of vehicles, can give fleet managers real insight into how long the new electric vehicles they’re considering will last compared to the gas and diesel vehicles they have experience with.
Geotab research shows that EV batteries could last 20 years or more if they degrade at an average rate of 1.8% per year, as we have observed.
According to our data, the simple answer is that the vast majority of batteries will outlast the usable life of the vehicle and will never need to be replaced. If an average EV battery degrades at 1.8% per year, it will still have over 80% state of health after 12 years, generally beyond the usual life of a fleet vehicle.
Telematics integrations can also help optimize a fleet’s charging schedules, both by scheduling EV charging for lower priced, off-peak hours and by identifying the most dependable high-speed charging stations along regular routes to minimize down time for both vehicles and drivers.
Finally, these data-driven platforms can provide fleet managers tools for tracking and reporting things like carbon emissions and overall energy consumption, which can streamline ESG reporting processes and make it easier for the worker bees to get regulators, administrators, and managers the sort of charts, tables, and graphs they love.
Something like that, anyway.
You can check out my Quick Charge with Nate McDonald, EV strategy and cross vehicle brand manager at Ford Pro, who explores how Ford’s in-house telematics can help fleet managers decarbonize, and head over to Geotab to find out more about their brand agnostic fleet management dashboard, below. Enjoy!
EV or gas – which is right for you?
SOURCES: Fleet Europe, Ford Pro, Geotab, McKinsey; add’l links in article.
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Geely-backed performance EV brand Polestar has had some troubling times in recent months, but its future is looking a whole lot better after the company secured a $600 million loan facility to help it keep on keepin’ on.
Despite vehicle sales picking up in 2025 on the strengths of the Polestar EV brand’s Swedish sensibilities, cutting-edge Chinese EV tech, and Volvo-aided safety specs, the company’s financial picture has been anything but rosy, with the threat of having its stock delisted from the NASDAQ looming large at several points.
In a vote of broader confidence and better times ahead, Volvo’s parent company Geely Sweden Holdings AB is backing the brand with more than half a billion dollars of fresh funding to extend its operational runway:
Polestar, as borrower, entered into a credit agreement with a wholly owned subsidiary, as lender, of Geely Sweden Holdings AB in relation to a subordinated term loan facility of up to USD 600 million, of which the last USD 300 million would require lender consent based on Polestar’s future liquidity needs. The term loan facility is available to Polestar for general corporate purposes.
The new funds are just the most recent part of a big week for Polestar – one that saw the Polestar 4 recently begin deliveries to its first North American customers, and recent upgrades to the Polestar 3 have made that car a viable V2G/V2x offering in Europe, as well. With that in mind, it’s no wonder that Geely wants to see how this all plays out.
The company has four models in its current line-up on sale in 28 countries, along with additional planned models that include the Polestar 7 SUV (set to be introduced in 2028) and the Polestar 6 coupe/roadster.
Electrek’s Take
Product-wise, at least, it’s hard to argue that Polestar’s future appears to be anything but bright. The new Polestar 3 crossover is a viable competitor to the industry-leading Tesla Model Y, and the upcoming Polestar 4 and 5 models seem like winners, too. To drive that point home, Polestar is promoting up to $18,000 in incentives to lure in Tesla buyers.
You can find out more about Polestar’s killer EV deals on the full range of Polestar models, from the 2 to the 4, below, then let us know what you think of the three-pointed star’s latest discount dash in the comments section at the bottom of the page.
SOURCE: Polestar.
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Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
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