May 22, 2024
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OPEC+ Meets Amid Strong Oil Market, Unlikely to Change Output Policy

In response to the backdrop of a robust oil market, a ministerial panel of OPEC+ is scheduled to meet on Friday. However, sources within OPEC+ have anonymously told Reuters that the meeting is unlikely to result in any changes to the group’s current oil output policy.

The meeting comes shortly after Saudi Arabia’s decision to extend its voluntary production cut into September, a move that has further bolstered oil prices.

Earlier reports from Energy Afrique indicated that output from OPEC experienced a sharp decline of 900,000 barrels per day (bpd) last month, reaching an average of 27.79 million bpd.

The panel, known as the Joint Ministerial Monitoring Committee, has the authority to call for a full meeting of OPEC and its allies, including Russia (OPEC+), if deemed necessary. However, sources suggest that Friday’s meeting will be brief and unlikely to lead to any recommendations for altering the current output policy.

As of Friday, oil prices were trading at nearly $86 a barrel, close to their highest level since mid-April. July witnessed a more than 14% increase in oil prices compared to June, marking the largest monthly percentage gain since January of the previous year.

Following Saudi Arabia’s announcement, Russian Deputy Prime Minister Alexander Novak declared that Russia would also reduce oil exports by 300,000 bpd in September.

Additionally, Algeria, which implemented an additional cut of 20,000 bpd for August, is still deliberating whether to extend the cut further.

At the last policy meeting in June, OPEC+ reached a comprehensive agreement to limit supply until 2024. As part of this agreement, Saudi Arabia committed to a voluntary production cut for July, which has now been extended to include August. The total output cuts now amount to 3.66 million bpd, approximately 3.6% of global demand.

As the meeting unfolds, industry watchers will keep a close eye on developments within OPEC+ and their potential impact on the oil market.

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