Macro

OPEC+ unexpectedly slashed oil output by 1.16 million barrels per day, led by Saudi Arabia and Russia, pushing total cuts to 3.66 million bpd. The move, opposed by the U.S., is expected to raise oil prices by up to $10 per barrel, signaling strong cartel cohesion despite Western pressure. The reductions begin in May and last through year-end, impacting global energy markets and inflation outlooks.

The United States is on track to produce 13.3 million barrels per day of crude and condensate, surpassing any previous global record, driven by shale output in Texas and New Mexico. This surge, led by market forces and efficiency gains, is countering OPEC+ supply cuts and tempering global oil prices, while challenging political narratives around Biden's energy policies. The increased production has helped stabilize domestic gas prices near $3.08 per gallon and eased inflationary pressures despite geopolitical tensions.

U.S. electricity demand is projected to grow 4.7% over the next five years, up from 2.6% in 2022 estimates, driven by data centers, manufacturing, and electrification, according to Grid Strategies. The report warns the grid is unprepared for this surge, risking reliability and higher costs without accelerated transmission investment. Increased inter-regional transmission is urged to meet clean energy demand and avoid costly, inefficient generation builds.

BP has suspended all Red Sea transits due to escalating Houthi militant attacks, following other major firms like Maersk and CMA CGM. The rerouting of vessels via the Cape of Good Hope risks supply chain delays and higher freight costs, with potential upward pressure on oil prices and ocean freight rates depending on the disruption's duration.