OPEC+ committee not planning talks on deeper oil output cuts, officials say
A key OPEC/non-OPEC monitoring committee set to meet Thursday in Abu Dhabi isn’t planning to discuss any deeper oil output cuts nor any other adjustments to the current supply pact, according to officials.
The officials stressed that the Joint Ministerial Monitoring Committee does not have the mandate to consider policy changes.
“The aim of the JMMC is not to look at new proposals, it’s to evaluate the current market situation and look at implementation,” Russian energy minister Alexander Novak told reporters Wednesday on the sidelines of the World Energy Congress. “And I think tomorrow we will discuss these questions.”
Novak will co-chair the nine-country JMMC meeting with his Saudi counterpart Prince Abdulaziz, who was sworn in as the kingdom’s energy minister on Sunday. The prince has been tight-lipped about his plans other than to say that Saudi oil policy would not change under his purview.
Saudi Arabia has already been cutting back more than it committed under the 1.2 million b/d OPEC/non-OPEC production cut agreement that is scheduled to run through March 2020. OPEC Secretary General Mohammed Barkindo told S&P Global Platts deepening the cuts, as some analysts have said the producer bloc needs to do in order to avoid a drop-off in prices in 2020, “is not in the cards.”
“The JMMC will consider and review the report of its technical committee that will analyze the August data, production and supply, from the six secondary sources, including from the direct sources of the participating countries, and ascertain who is doing what in terms of compliance, and will also look at the impacts of their level of conformity on the market,” Barkindo said.
Oil prices have risen in the past few days on speculation that the JMMC, which advises the larger 24-country OPEC/non-OPEC coalition, would endorse more cuts.
“We don’t expect anything new,” said Parviz Shahbazov, the energy minister for Azerbaijan who isn’t a member of the JMMC but may attend its proceedings. “The July agreement reached at the ministerial meeting at the beginning of July is in force, will be in force until the end of March 2020.”
Ministers have blamed slumping oil prices on demand-sapping trade tensions between the US and China, which are out of their control. UAE energy minister Suhail al-Mazrouei said Sunday that he “wouldn’t suggest” more oil cuts amid the US-China trade spat.
From a physical balances standpoint, analysts say the market has been tightening in the past few months due to the OPEC/non-OPEC cuts and US sanctions on Iran and Venezuela.
Market outlooks for 2020, however, tend to be bearish, with demand growth set to slow and more supply expected to come online from the US and other non-OPEC countries.
A Gulf delegate told Platts that any price recovery from deeper cuts would be “short-lived” and that OPEC would risk ceding more market share to US shale producers.