OPEC Plus keeps oil output levels unchanged

The Joint Ministerial Monitoring Committee (JMMC) of OPEC Plus affirmed on Friday the current levels of oil production of the group and didn’t make any recommendation to change the output.

Saudi Minister of Energy Prince Abdulaziz bin Salman chaired the 49th Meeting of the JMMC via videoconferencing.

The JMMC reviewed the crude oil production data for the months of May and June 2023 and noted the overall conformity for participating OPEC and non-OPEC countries of the Declaration of Cooperation (DoC). The committee urged all the participating countries to conform and fully adhere to the compensation mechanism.

The committee reaffirmed the commitment of its member countries to the DoC which extends to the end of 2024 as agreed in the 35th OPEC and non-OPEC Ministerial Meeting (ONOMM) on June 04, 2023. It also decided to adjust the frequency of the meetings to every two months for the JMMC and the authority of the JMMC to hold additional meetings, or to request an OPEC and non-OPEC Ministerial Meeting as agreed on in the 33rd OPEC and non-OPEC Ministerial Meeting (ONOMM) on October 05, 2022.

The committee will continue to closely assess market conditions noting the willingness of the DoC member countries to address market developments and their readiness to take additional measures at any time in tandem with the strong cohesion of OPEC and non-OPEC countries.

The committee also expressed its full recognition and support for the efforts of Saudi Arabia to support the stability of the oil market and reiterated its appreciation for the Kingdom’s additional voluntary cut of one million barrels per day which it extended to the month of September.

The committee acknowledged the Russian Federation's additional voluntary reduction of exports by 300,000 barrels per day for the month of September.

The next meeting of the JMMC is scheduled for October 04, 2023.

OPEC Plus sticks to oil output targets

OPEC Plus agreed to stick to its oil output targets at a meeting on Sunday as the oil markets struggle to assess the impact of a slowing Chinese economy on demand and a G7 price cap on Russian oil on supply.

The decision comes two days after the Group of Seven (G7) nations agreed a price cap on Russian oil.

OPEC Plus which comprises the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, angered the United States and other Western nations in October when it agreed to cut output by 2 million barrels per day (bpd), about 2% of world demand, from November until the end of 2023.

Washington accused the group and one of its leaders, Saudi Arabia, of siding with Russia despite Moscow's war in Ukraine.

OPEC Plus argued it had cut output because of a weaker economic outlook. Oil prices have declined since October this year due to slower Chinese and global growth and higher interest rates, prompting market speculation the group could cut output again.

On Sunday the group of oil producers decided to keep the policy unchanged. Its key ministers will next meet on February 01, 2023 for a monitoring committee while a full meeting is scheduled for June 03-04, 2023.

On Friday, G7 nations and Australia agreed a $60 per barrel price cap on Russian seaborne crude oil in a move to deprive President Vladimir Putin of revenue while keeping Russian oil flowing to global markets.

Moscow said it would not sell its oil under the cap and was analyzing how to respond.

Many analysts and OPEC ministers have said the price cap is confusing and probably inefficient as Moscow has been selling most of its oil to countries like China and India, which have refused to condemn the war in Ukraine.

Neither an OPEC meeting on Saturday nor the OPEC Plus meeting on Sunday discussed the Russian price cap.

Russia's Deputy Prime Minister Alexander Novak said on Sunday Russia would rather cut production than supply oil under the price cap and said the cap may affect other producers.

Sources have told Reuters several OPEC Plus members have expressed frustration at the cap saying the anti-market measure could ultimately be used by the West against any producer.

The United States said the measure was not aimed at OPEC.

JP Morgan said on Friday that OPEC Plus could review production in the New Year based on fresh data on Chinese demand trends and consumer compliance with price caps on Russia crude output and tanker flow.

 

Iran to continue constructive cooperation with OPEC

Iranian Oil Minister, Javad Oji said his country will continue constructive interactions with Organization of Petroleum Exporting Countries (OPEC) and will support the organization’s new Director General, Shana reported.

“As a founding member of OPEC, Iran will definitely continue its constructive interaction with OPEC and would effectively support the new Secretary General as well as the OPEC secretariat,” Oji said at the 31st OPEC and Non-OPEC Ministerial Meeting held via video conference.

Honoring the memory of former OPEC Secretary General Mohammad Sanusi Barkindo and welcoming his replacement Haitham Al Ghais, the minister said, “I received the very sad news of the passing away of His Excellency Mohammad Sanusi Barkindo, Distinguished Secretary General OPEC. On behalf of the Government and people of the Islamic Republic of Iran, I would like to express my heartfelt condolences to Your Excellencies, particularly His Excellency Timipre Sylva, Minister of State for Petroleum Resources, Distinguished Government and Great People of Nigeria and the esteemed Staff of the OPEC Secretariat.”

“Undoubtedly, His Excellency’s round-the-clock efforts as the OPEC Secretary General to promote solidarity and unity among Member Countries, along with his trust in collective wisdom and efforts for creating understanding have always helped the Organization and its Members,” he added.

He also congratulated Haitham Al Ghais for assuming the position of the OPEC Secretary General, saying, “I am confident that your appointment will be a critical step in advancing the Organization, achieving the collective goals of the OPEC and its Members and the fair and forward-looking leadership of the OPEC Secretariat.”

“I am confident that the OPEC’s successes in recent years will continue in the future under the leadership of Al Ghais. I wish him every success in his new position during this challenging time for fossil fuels,” he added.

Iraq fails in meeting oil production quota

Iraq, second-largest producer of OPEC and one of the leading OPEC plus members is struggling to boost its oil production as much as its quota in the pact allows. 

However, with January output of 120,000 barrels per day (bpd) was lower than its production ceiling, according to data from state marketing firm SOMO, according to a Reuters report.

The figures from SOMO showed that instead of rising, oil production in Iraq dropped in January by 63,000 bpd from December 2021. This was due to insufficient storage capacity, an oil official in Iraq told Reuters.

Exports from the second-largest OPEC producer after Saudi Arabia declined in January because of bad weather, maintenance of export terminals and technical issues, the official said.

Unplanned outages and a lack of capacity to pump more led to lower or stagnant production in January at OPEC members Iraq, Iran, Angola, Congo, and Libya, a Reuters survey showed earlier this week.

Iraq and several other producers among OPEC and OPEC plus are not pumping as much quantity as the pact allow. This is tightening the market and distorting analyst assumptions about market balances.

For half a year now, OPEC plus has actually added lower volumes to the market each month than the 400,000 bpd nominal monthly increase announced in each of the OPEC plus meeting since August 2021.

At its latest monthly meeting on Wednesday, the OPEC+ group announced another 400,000 bpd increase in production for March.

While the nominal increase is modest, as in the previous seven months, many producers within the OPEC plus group are struggling to pump to their quotas, leaving an increasingly large gap between production increase on paper and actual growth in output, which leaves the market tighter than many analysts and forecasters, had anticipated just a few months ago.

Going forward, the market will be closely looking at how much of that increase OPEC plus can actually deliver, considering that half of its members have lagged in ramping up output to their quotas so far, while more producers­—with few exceptions such as Saudi Arabia and the UAE—will be struggling to raise production.

OPEC plus decides fate of energy market in 16 minutes

The Ministers of the OPEC plus, who met via video conference, rubber-stamped in just 16 minutes the monthly production hike by 400,000 bpd. In the shortest meeting so far in its history, OPEC+ decided on Wednesday to increase the collective production by 400,000 barrels per day (bpd) in March 2002. 

This left production plan unchanged and pushed Brent price above US$90/barrel.

Some analysts, and traders, had expected a higher production increase, considering the recent rally that has frustrated major oil-consuming nations, including the United States.

Earlier this week, Goldman Sachs had expressed the view that OPEC plus might decide to announce a larger production increase for March than the usual 400,000 bpd, keeping in view the recent oil rally to and the potential for renewed discontent from major oil importers at these high price levels.

OPEC plus confirmed the 400,000-bpd increase in record time and didn’t even plan a press conference after the meeting. 

Brent Crude prices returned to US$90 per barrel just after news of the modest production increase and the record-short meeting broke.

While the nominal increase is modest, as in the previous seven months, many producers within the OPEC+ group are struggling to pump to their quotas, leaving an increasingly large gap between production increase on paper and actual growth in output, which leaves the market tighter than many analysts and forecasters, had anticipated just a few months ago.

Going forward, the market will be closely looking at how much of that increase OPEC plus can actually deliver, considering that half of its members have lagged in ramping up output to their quotas so far, while more producers­—with few exceptions such as Saudi Arabia and the UAE—will be struggling to raise production.

According to the production table provided by OPEC, Saudi Arabia and Russia will each have a quota of 10.331 million bpd in March 2022.

The next OPEC plus meeting is scheduled for March 02, 2022.

OPEC Plus to add 400,000 bpd oil production in February

OPEC Plus decided on Tuesday to add another 400,000 barrels per day (bpd) to its total oil production in February. The move was widely expected by the market, but oil prices rose 1% just after the meeting concluded

At the end of a very short ministerial meeting, the cartel did not deviate from its current plan to ease the production cuts by 400,000 bpd each month until it unwinds all the supply curbs. The move was widely expected by the market, and oil prices were up by around 1% just after news of the decision broke.

Before the meeting started, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, officially closed the previous meeting from December 2, which OPEC Plus had left in session, signaling it could revisit last month’s decision to raise production by 400,000 bpd in January if Omicron hits global oil demand hard.

At 33 days, the meeting that opened on December 2 was the longest ever, at least on paper, in the history of OPEC and OPEC Plus.

The meeting opened and closed and didn’t produce any surprises about the OPEC+ group’s immediate oil supply policy. The cartel is anticipated to continue to raise production by 400,000 bpd in February and extend the compensation period until June 2022.

During the meeting, non-OPEC producer Kazakhstan was called out for its low compliance with the cuts, and was pressured to improve its conformity level, Amena Bakr, Deputy Bureau Chief and Chief OPEC Correspondent at Energy Intelligence, reported, citing delegates.

Days before Tuesday’s meeting, the general market sentiment, and expectations were that the cartel would likely proceed with its oil production policy of the past few months by deciding to add another 400,000 bpd to production quotas in February.

The next meeting of OPEC Plus is scheduled to be held on February 2, 2022 when the group is expected to decide production levels for March.