OPEC+ panel meets amid stronger oil market

OPEC+ panel meets amid stronger oil market

OPEC+ Ministerial Panel Likely to Maintain Current Oil Output Policy

oil

London/Dubai, Aug 4 (ANBLE) – The upcoming meeting of the OPEC+ ministerial panel is expected to maintain the group’s current oil output policy, according to five OPEC+ sources. The decision by Saudi Arabia to extend its voluntary production cut into September has buoyed oil prices and provided further support for the existing strategy.

The Joint Ministerial Monitoring Committee, which convenes on Friday, can call for a full meeting of OPEC+ if necessary. However, the sources do not anticipate any recommendations for changing the output policy to arise from this meeting, which they believe will be relatively brief.

Oil prices experienced a substantial increase of over 14% in July compared to June, marking the largest monthly percentage rise since January of last year. This surge in prices can be attributed to tighter supply and growing demand, which outweighed concerns about potential interest rate hikes and persistent inflation that could potentially impact economic growth.

While the meeting is not expected to result in policy changes, the decision by Saudi Arabia, the leader of OPEC, to extend its voluntary oil output cut of one million barrels per day (bpd) for an additional month indicates a commitment to support the market. Furthermore, this cut may be extended beyond September or deepened. Oil prices are currently trading close to $86 a barrel, nearing their highest level since mid-April.

Russia, a key ally in the OPEC+ alliance, will also reduce oil exports by 300,000 bpd in September, according to Deputy Prime Minister Alexander Novak.

Notably, Algeria, an OPEC member, had announced an additional voluntary cut of 20,000 bpd for August. The decision on whether to extend this cut into September is still pending.

At its previous policy meeting in June, OPEC+ reached a comprehensive agreement to limit oil supply until 2024. Additionally, Saudi Arabia committed to a voluntary production cut for July, which it subsequently extended to include August.

The current output cuts, excluding the supplementary voluntary reductions made by Saudi Arabia, Russia, and Algeria, total 3.66 million bpd, equivalent to around 3.6% of global demand.

Overall, the OPEC+ ministerial panel meeting is anticipated to maintain the existing oil output policy in order to support the market and continue the positive momentum seen in oil prices. While concerns about inflation and interest rate hikes persist, the tighter supply and rising demand currently outweigh these worries. The commitment shown by Saudi Arabia, Russia, and other participating countries further solidifies the cooperative efforts within the OPEC+ alliance.

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