The Joint Ministerial Monitoring Committee (JMMC), the OPEC+ panel monitoring the oil market, is not expected to recommend in August any changes to the current production policy plan of the group, OPEC+ delegates told Bloomberg on Thursday.
The JMMC panel meets more frequently than the OPEC+ ministers and typically observes the most recent market developments and, if necessary, recommends a course of action to the ministerial meetings. The JMMC meetings are currently being held every two months, with the previous taking place in early June.
When the panel meets again on August 1, the meeting is expected to be a routine one, and no recommendations on oil production policy – other than the OPEC+ group has already announced – are expected to be issued, according to Bloomberg’s anonymous sources among the OPEC+ delegates.
Most market observers reckon that OPEC+ would wait to see how summer demand will have held up by September, before potentially starting to unwind part of the current production cuts.
In early June, the OPEC+ group decided to extend most oil output reductions into 2025. But it also said it could begin unwinding some voluntary cuts after the end of the third quarter of 2024—subject to market conditions.
The potential of OPEC+ barrels coming on the market in the fourth quarter of the year weighed on oil prices. In the aftermath of the negative market reaction, the energy ministers of Saudi Arabia and the United Arab Emirates (UAE), as well as Russia’s top oilman and deputy prime minister, sought to reassure the market that OPEC+ knows what is doing and that the market would soon realize the group has done “the right thing.”
“It’s a year and a half agreement, it has all the mechanics, some of the mechanics are not new, we have also exercised it before,” Saudi Energy Minister Prince Abdulaziz bin Salman said, as quoted by Reuters.
“Especially this issue of pausing or reversing,” the Saudi minister added.
Most analysts have commented the alliance’s announcement is bearish for oil prices because of the plan to begin unwinding some of the cuts. Most analysts don’t think there would be market conditions for the group to begin gradually adding supply in the fourth quarter of 2024, either.
By Charles Kennedy for Oilprice.com
