OPEC+ meeting shows endorsement for existing production cuts

OPEC+ meeting shows endorsement for existing production cuts

The 24th Meeting of the Joint Ministerial Monitoring Committee (JMMC) took place via videoconference on Tuesday under the Chairmanship of Energy Minister Prince Abdulaziz Bin Salman and co-Chair Alexander Novak, deputy prime minister of the Russian Federation, with widespread support for a three-month extension of the current level of oil production cuts.

Saudi Arabia, however, called on fellow OPEC+ members to be flexible in responding to oil market needs as it builds the case for a tighter oil production policy in 2021 to tackle weaker demand. OPEC+ groups the Organization of the Petroleum Exporting Countries, Russia and others.

“We as a group do not want to give the markets any excuse to react negatively;” Prince Abdulaziz said at the start of the JMMC virtual meeting.

“The markets will not be kind to those who do not stick to agreements. This is why we must be prepared to act according to the requirements of the market. I recently said we must be ready to tweak the terms of our agreement if need be,” he said.

OPEC+ will have a full meeting on Nov. 30 and Dec. 1 to decide output policy for next year.

Full oil cut commitments

Meanwhile, the United Arab Emirates Energy Minister Suhail Mohamed Faraj Al Mazrouei told a closed OPEC+ panel meeting on Tuesday that all members should deliver on full oil cut commitments before agreeing to changes or extension of the current pact, an OPEC+ source told Reuters.

OPEC and its allies are considering a rollover of their existing oil production cuts of 7.7 million barrels per day by three or six months when they expire in January. OPEC sources hinted last week that many members were in support of extending the production cuts that were supposed to ease 2.0 million bpd in January, to 5.7 million bpd.

While the agreement of the group to keep at it seems to have the support of most members of the group, challenges remain. Some members, including Iraq, have signified that they may not be onboard with an agreement unless it garners unanimous support from all members.

Meanwhile, OPEC Secretary General Mohammad Sanusi Barkindo, started the video conference by offering the group’s congratulations to Novak on his promotion to the position of Deputy Prime Minister.

“It is a thoroughly deserved recognition of his talents, hard work and diplomatic skills that we have all seen over the last 4-5 years. We are also extremely happy to see Novak retain the Declaration of Cooperation (DoC) portfolio. Besides, continuing to be the reliable, dependable and judicious bridge linking OPEC and non-OPEC.”

Barkindo said, “It is also important to recognize the leadership of the Kingdom of Saudi Arabia; through its G20 Presidency in 2020. The country has been extremely active and supportive of developing countries; as they look to navigate a path through the pandemic.”

Changing market dynamics

He added, “For the oil market, the past month has offered both positives and negatives. Given the impending 180th meeting of the OPEC Conference on Nov. 30, and the 12th OPEC and non-OPEC Ministerial Meeting on Dec. 1, it is vital that we appraise all the data and analysis; look at how details and numbers changed since the start of the year and review what achieved by the DoC to date.”

Barkindo added; “The DoC has achieved some hard win successes in tackling the impact of the COVID-19 pandemic on the global oil market. With the advent of second and in some cases third waves, we cannot be complacent.

“We need to fully understand the required, and be ready to adapt to any changing market dynamics. This is to ensure we stay on the path that helps restore balance; and a sustainable stability to support growth and investments in the months and years ahead.

“We need the courage and flexibility we have all shown this year to take the decisions required ahead; one step at a time, guided by the data and robust analysis.”