The OPEC logo is pictured at OPEC headquarters on October 4, 2022.
Joe Clamar | AFP | Getty Images
A technical committee of the influential coalition of oil producers OPEC+ made no recommendations to change the group’s existing production policy at its last meeting, according to three delegates.
The OPEC+ Joint Ministerial Monitoring Committee, which tracks the alliance’s compliance with its production quota, met digitally on Wednesday. OPEC+’s second technical group, the Joint Technical Committee that studies market fundamentals, has canceled a virtual meeting originally scheduled for January 31, according to a delegate.
Neither committee can outright decide OPEC+ production policy, but the JMMC can recommend plans for consideration of coalition ministers.
The JMMC will then meet on April 3, a delegate said. The three delegates preferred to remain anonymous because they are not authorized to speak publicly on the subject.
“The JMMC reaffirmed its commitment to the DoC which extends to the end of 2023, as agreed at the 33rd Ministerial Meeting of OPEC and Non-OPEC Countries (ONOMM) on October 5, 2022, and has urged all participating countries to achieve full compliance,” OPEC+ said. the statement said. The DoC refers to the Declaration of Cooperation, or the OPEC+ agreement.
Three OPEC delegates had told CNBC that the group would likely echo a December ministerial decision to roll over the output policy agreed to in October. Under this provision, the group would nominally reduce its production quotas by 2 million barrels per day. Delivered reductions would be lower than this figure, as actual production has long lagged behind production targets due to declining capacity, underinvestment and Western sanctions.
Questions have arisen as to whether potential increases in demand from China – the world’s largest crude oil importer, which is now easing tight Covid-19 restrictions that have covered its purchases for most of the year last – could push the producer alliance to increase their production.
“Global oil demand is expected to increase by 1.9 mb/d in 2023, to a record 101.7 mb/d, with nearly half of China’s gain following the lifting of its Covid restrictions,” said the Paris-based energy monitoring agency, the International Energy Agency. in its latest monthly report on the oil market, published on January 18. OPEC+ countries need to closely monitor developments in demand from Beijing, two delegates confirmed.
OPEC+ producers are also tracking the impact on demand from firm inflation rates – with the European Central Bank, Bank of England and US Federal Reserve set to decide monetary policy this week – as well as the access to sanctions-restricted Russian oil supplies. The IEA estimates that Russia’s crude oil production fell from 9.8 million barrels per day in November to 9.77 million barrels per day in December, after EU sanctions implemented on December 5 banned maritime imports of crude oil from Moscow. A second set of measures will replicate the ban on imports of petroleum products and will come into force on February 5.
Non-G7 countries can continue to benefit from Western financial and shipping services to take delivery of Russian crude oil, provided they make their purchases at a specified price level, now set at $60 a barrel. The plan was devised by the G-7 to keep global markets supplied, while simultaneously shrinking Russian President Vladimir Putin’s war chests to sponsor Moscow’s full-scale invasion of Ukraine. Russia has so far signaled no intention to seek an exemption from its production quota and continues to hold the OPEC+ co-chairmanship alongside Saudi Arabia, two delegates said.
OPEC+ has long taken a cautious approach to its decision-making as it grapples with market supply and demand fundamentals, pressure from international consumers to help ease the burden on households, and the need encourage new investment in unused capacity.
“I don’t think it’s a sufficient investment to bring in the additional capacity that will be needed to supply the market,” Saudi state-controlled Aramco CEO Amin Nasser told CNBC’s Hadley Gamble on May 18. January. “It will not alleviate a situation where the demand is increasing and offsetting the decline. You need additional investment elsewhere, in the world, to meet global demand.