An OPEC and JMMC meetings committee this week is unlikely to recommend any changes to its current agreement to cut production and start easing some cuts from December, despite recent sharp declines in oil prices.
Senior ministers from the Organization of the Petroleum Exporting Countries and its Russia-led allies, or OPEC+ as the group is known, will hold a joint meeting of the Joint Ministerial Monitoring Committee online on Wednesday.
One of the sources, speaking on condition of anonymity, said, “Although the oil market situation is a bit complicated, I do not expect a new decision or any change in the OPEC+ agreement at Wednesday’s meeting.”
Oil prices fell in 2024 with Brent crude falling last month below $70 a barrel for the first time since 2021, under pressure from concern about global demand and rising non-OPEC+ supply. Brent was trading near $71 on Tuesday. [O/R]
OPEC+ is currently cutting production by a total of 5.86 million barrels per day, or about 5.7% of global demand, in a series of steps agreed since late 2022.
Its latest agreement calls for OPEC+ to increase production by 180,000 bpd in December, as part of a plan to gradually untie the last layer of voluntary cuts during 2025. The increase was postponed from October after the slippage of prices.
Emphasis will also be placed on compliance by countries with cuts at the meeting and in the coming weeks, especially Iraq and Kazakhstan that promised so-called compensation cuts of 123,000 barrels per day in September
An OPEC+ source told Reuters last week that when it becomes clear that compensation cuts are being made in September, this will allow the December increase to move forward as the addition of net supply to the market will be minimal.
OPEC+ meetings to monitor production and its role in market stability
OPEC-Joint Ministerial Monitoring Committee (JMMC) meetings are important events in the oil industry, involving key stakeholders from the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries. The following is an overview of these meetings:
Key Features of OPEC and JMMC meetings
Purpose:
The Joint Ministerial Monitoring Committee is responsible for monitoring the implementation of production agreements concluded by OPEC and non-OPEC participating countries. Its primary objective is to ensure that oil production levels are in line with agreed targets for stabilizing the oil market.
Genesis:
The Joint Ministerial Monitoring Committee typically consists of a small group of OPEC members along with representatives from non-OPEC countries, especially those that have agreed to cooperate with OPEC in managing oil production.
Iteration:
OPEC-Joint Ministerial Monitoring Committee meetings are held regularly, often monthly or bi-monthly, especially during periods of high market volatility or when oil prices fluctuate significantly. Additional meetings may be held as needed.
Decision Making:
While the Joint Ministerial Committee for Production Control does not have the authority to make binding decisions, recommendations are influential and often pave the way for subsequent OPEC meetings. full OPEC meeting usually considers the findings and recommendations of the Joint Ministerial Committee Production Control before making formal decisions on production policy.
Impact on oil prices:
results of the OPEC and OPEC Joint Ministerial Committee meetings can significantly affect global oil prices. Announcements related to production cuts or increases can trigger immediate reactions in the market, affecting the dynamics of supply and demand.
Coordination with non-OPEC producers:
Joint Ministerial Committee for Production Control plays a crucial role in coordinating with non-OPEC producers, especially those in OPEC+ arrangement, to ensure collective adherence to production targets. This cooperation vital to stabilizing prices in global oil market
OPEC+’s role in stabilizing the global oil market
OPEC+ is an alliance of oil-producing countries that includes members of the Organization of the Petroleum Exporting Countries and additional non-OPEC oil-producing countries, most notably Russia. It was founded in 2016 as a means of coordinating oil production and stabilizing global oil markets.
The following are the main roles and actions of OPEC+:
1. Oil Production Coordination:
OPEC+ aims to regulate crude oil production among its member countries to control global supply. By adjusting production, they can influence oil prices in the global market. When prices are too low, OPEC+ may agree to cut production to reduce supply, helping to raise prices. Conversely, if prices are high, they may increase production to lower prices.
2. Market stability:
OPEC+ seeks to maintain a balance between global oil supply and demand. Its goal is to avoid extreme fluctuations in oil prices, which can negatively affect both producers and consumers. By coordinating production cuts or increases, it helps stabilize the market and provide predictability to businesses and governments.
3. Management of economic and geopolitical factors:
OPEC+ responds to a range of factors that affect the oil market, such as:
Global economic growth or recession, affecting oil demand
– Geopolitical tensions or conflicts in major oil-producing regions.
– Technological advances or changes in energy policies (e.g., the transition to renewable energy).
OPEC+ decisions reflect these factors in order to protect the interests of member countries.
4. Ensure compliance:
OPEC+ uses the Joint Ministerial Monitoring Committee to track members’ compliance with agreed production targets. The committee meets regularly to analyze market data and recommend changes in production levels if necessary. This helps ensure that all Member States adhere to the quotas agreed at the meetings.
