OPEC+ sticks to oil policy, repeats could pause October hike

A meeting of top OPEC+ ministers has kept oil output policy unchanged including a plan to start unwinding one layer of output cuts from October, and repeated that the hike could be paused or reversed if needed.

Several ministers from the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+ as the group is known, held an online joint ministerial monitoring committee meeting (JMMC) on Thursday.

OPEC+ is currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7 per cent of global demand, in a series of steps agreed since 2022 to bolster the market amid uncertainty over global demand and rising supply outside the group.

In a statement after Thursday’s meeting, OPEC+ said the members making the most recent layer of cuts – a 2.2 million bpd voluntary cut until September – reiterated that its gradual phase-out could be paused or reversed, depending on market conditions.

The 55th Meeting of the Joint Ministerial Monitoring Committee(JMMC) was held today via videoconference, under the Chairmanship of HRH Prince Abdulaziz bin Salman Al-Saud, Kingdom of Saudi Arabia’s Minister of Energy, and Co-Chair HE Alexander Novak, Russian Deputy Prime… pic.twitter.com/YRpTJIUbcK

— OPEC (@OPECSecretariat) August 1, 2024

Oil prices have fallen from a 2024 high above $92 a barrel in April to below $81, pressured by concern about the strength of demand but finding support this week from increasing tensions in the Middle East.

Russian Deputy Prime Minister Alexander Novak said, on Thursday, the current level of oil prices was comfortable for Russia, its budget, and other participants in the market. Supply and demand remained in balance, he added.

“Starting from the fourth quarter, if the balance of supply and demand is positive, a partial increase in production is possible,” Novak said.

OPEC+ still has some weeks before it needs to decide whether to proceed with the output hike from October, a source close to the group said.

Changing oil demand trends

Algeria’s Energy Minister Mohamed Arkab said uncertainties affecting oil markets were unlikely to continue for much longer, as long as the market remains adequately supplied.

Oil demand, he added, was expected to follow a sustained upward trend in the coming weeks.

OPEC+ agreed at its last meeting in June to phase out the 2.2 million bpd cut over the course of a year from October 2024 until September 2025. It also agreed then to extend earlier cuts of 3.66 million bpd until end-2025.

Soon after that, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said OPEC+ could pause or reverse the production hikes if it decided the market is not strong enough.

Thursday’s meeting also noted assurances from Iraq, Kazakhstan and Russia made during the meeting to achieve full conformity with pledged output cuts, the statement said. Those countries had earlier delivered plans to compensate for past overproduction.

An OPEC+ source said the chair of the meeting was insisting that members show commitment to the compensation plan.

The JMMC, which groups the oil ministers of Saudi Arabia, Russia and other leading producers, usually meets every two months and can make recommendations to the wider OPEC+ group.

The JMMC will hold its next meeting on October 2.

Read: Saudi Arabia to focus on energy transition, Aramco to maintain capacity: Prince Abdulaziz