In an upcoming development for the oil market, sources familiar with the matter have indicated that an imminent mini OPEC+ ministerial meeting scheduled for next month is unlikely to propose changes to the group’s current output policy. This includes maintaining plans to gradually unwind oil output cuts commencing in October, according to three sources who spoke to Reuters on condition of anonymity.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, collectively known as OPEC+, are set to convene an online joint ministerial monitoring committee meeting (JMMC) on August 1. The primary agenda of the meeting, as described by one of the sources, is to conduct a comprehensive assessment, essentially serving as a “pulse check” on the market’s stability and conditions.
Oil prices have recently held steady around $85 per barrel, bolstered by ongoing geopolitical tensions in the Middle East and declining global inventories. However, concerns persist regarding sustained high interest rates and their potential impact on demand, which have tempered price gains throughout the year.
Currently, OPEC+ is implementing output cuts totaling 5.86 million barrels per day (bpd), equivalent to approximately 5.7% of global demand. These cuts have been implemented in phased increments since late 2022 as part of a strategic response to market dynamics.
During its last meeting in June, OPEC+ members agreed to extend existing production cuts of 3.66 million bpd until the end of 2025. Additionally, the group decided to prolong the latest tranche of cuts—amounting to 2.2 million bpd by eight participating members—by three months, maintaining them until September 2024.
Looking ahead, OPEC+ plans to gradually phase out the 2.2 million bpd cuts over the course of one year, starting from October 2024 and concluding in September 2025. This phased approach aims to carefully calibrate supply increases in response to evolving market conditions.
Russian Deputy Prime Minister Alexander Novak recently commented on the flexibility of the agreement, indicating a willingness to adjust output levels if deemed necessary based on current market assessments.
The JMMC typically convenes every two months and holds the authority to propose policy adjustments, which are subsequently deliberated upon and ratified during full OPEC+ ministerial meetings involving all member states.
In parallel with these developments, oil prices saw extended gains supported by a larger-than-expected reduction in crude inventories in the United States, the world’s largest oil consumer. Brent futures rose to $85.49 a barrel by 0819 GMT, while US West Texas Intermediate (WTI) crude climbed to $83.54, reflecting positive momentum from the previous trading session.
The upcoming mini meeting of OPEC+ on August 1 is poised to provide critical insights into the group’s strategic outlook amidst ongoing market dynamics and geopolitical factors influencing global oil markets.
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