The OPEC logo is pictured at OPEC headquarters on October 4, 2022.
Joe Clamart | Afp | Getty Images
A technical committee of the influential OPEC+ alliance of oil producers made no recommendation to change the group’s current production policy at its latest 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 explicitly decide on OPEC+ production policy, but the Joint Military Committee (JMMC) can recommend plans for review by coalition ministers.
One of the delegates said that the Joint Committee for the Management of Medical Devices will meet on April 3. The three delegates preferred not to be named because they are not authorized to speak publicly on the matter.
The Joint Committee for Military Medicine reaffirmed its commitment to the compliance agreement that extends until the end of 2023 as agreed upon at the 33rd OPEC and Non-OPEC Ministerial Meeting (ONOMM) on October 5, 2022, and urged all participating countries to achieve full compliance. The statement said. DoC stands for Declaration of Cooperation, or OPEC+ Agreement.
Three OPEC delegates indicated to CNBC that the group will likely repeat a ministerial decision in December to extend the production policy agreed upon in October. Under this provision, the group will nominally reduce its production quotas by 2 million barrels per day. The cuts delivered will be below that figure, as actual production has long lagged behind production targets due to diminishing capacity, lack of investment and Western sanctions.
Questions have been raised about whether potential increases in demand from China – the world’s largest importer of crude oil, which is now easing tough Covid-19 restrictions that eased purchases for much of last year – could prompt the producer alliance to ramp up their output.
The Paris-based International Energy Agency said: “Global oil demand is set to rise by 1.9 million barrels per day in 2023, to a record high of 101.7 million barrels per day, with nearly half of the gains coming from China after the lifting of Covid restrictions. “. Two delegates at the latest Monthly Oil Market Report released on January 18 emphasized that OPEC+ countries should closely monitor demand development in Beijing.
OPEC+ producers are also tracking the impact of demand on steady inflation rates – the European Central Bank, Bank of England and US Federal Reserve prepare to decide on their monetary policy this week – as well as access to sanctions-restricted Russian oil supplies. The International Energy Agency 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 European Union sanctions imposed on December 5 that intercepted Moscow’s seaborne imports of crude oil supplies. A second set of measures will repeat the ban on imports of petroleum products and will take effect on February 5.
Non-G7 countries may continue to use Western financial and shipping services to take delivery of Russian crude oil, provided they make their purchases below a set price level, which is now set at $60 a barrel. The plan was designed by the G-7 to keep supplies on global markets, while slashing Russian President Vladimir Putin’s war coffers at the same time as she sponsors Moscow’s all-out invasion of Ukraine. Two delegates said Russia has so far shown no intention of asking for an exemption from its production quota and continues as OPEC+ co-chair alongside Saudi Arabia.
OPEC+ has always taken a cautious approach to its decision-making process, as it grapples with the fundamentals of market supply and demand, pressure from international consumers to help ease the burden on households, and the need to incentivize more investment in spare capacity.
Amin Nasser, CEO of state-owned Saudi Aramco: “I don’t think it’s a sufficient investment to bring in the additional capacity that would be needed to supply the market.” Hadley Gamble said on CNBC on Jan. 18. “It’s not going to mitigate a situation where demand is growing and offset the decline. You need additional investment elsewhere, globally, to meet global demand.”