The Joint Ministerial Monitoring Committee of the OPEC+ alliance is set to meet on Friday, with high expectations that it will not recommend any new oil production policy.
Ministers from the Organization of the Petroleum Exporting Countries (OPEC) alliance, known as OPEC+, will convene on the fourth of August. The committee, led by Russia, has the option to call for a full OPEC+ meeting if necessary.
According to six sources within OPEC+, as reported by Reuters, it is unlikely that the alliance will change its current oil production policy during the committee meeting on Friday.
Oil rose to its highest level in three months this week, with Brent crude surpassing $85 per barrel, driven by supply constraints and increasing demand. These factors outweigh concerns that rising interest rates and persistently high inflation could undermine economic growth.
The six sources mentioned that it is unlikely for the committee to make any changes to the current policy during the online meeting on Friday. One of the sources stated that the surge in oil prices is the reason why they are not considering any new measures or actions at this time.
Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman Al Saud, stated in July that OPEC+ will continue its efforts to surprise the markets.
Regarding market conditions, on July 21st, the UAE Energy Minister told Reuters that the current actions by OPEC+ are sufficient for the time being. He added that the alliance, “only needs a phone call,” if there is a need for further steps.
In April, several member countries of the alliance announced oil production cuts ahead of a ministerial committee meeting.
During the last production policy discussion meeting in June, the OPEC+ alliance reached a broad agreement to limit supplies until 2024. Saudi Arabia pledged voluntary production cuts in July, which were then extended to August.
Extending the production cut
Analysts told Reuters last week that they expect Saudi Arabia to extend its voluntary production cut for another month, including September.
In a report, National Australia Bank mentioned that it is expecting Saudi Arabia to announce the extension of the voluntary production cut during the committee meeting on Friday.
Bloomberg reported on Wednesday that OPEC is bringing stability to volatile oil markets, noting that oil price fluctuations have declined due to the voluntary production cuts and the possibility of the United States halting interest rate increases.
They also mentioned that the crude oil production by the OPEC organization experienced its largest decline in 3 years, as Saudi Arabia reduced its production even further to support global markets.
Read more: OPEC+ extends oil production cuts until 2024
According to a survey conducted by Bloomberg, OPEC’s average daily oil production reached 27.79 million barrels last month, a decrease of 900,000 barrels per day. This is the largest decline since the organization and its allies reduced supplies during the peak of the COVID-19 pandemic in 2020.
A spokesperson for the U.S. Department of Energy said on Tuesday, that the U.S. administration withdrew an offer to purchase six million barrels of oil to bolster the strategic reserves amid expectations of continued oil price increases due to production cuts.
Oil prices declined on Wednesday after achieving significant gains, but still remain close to their highest levels since April. This comes after data showed strong demand for crude oil and fuel products in the United States, offsetting concerns about China’s economic recovery slowdown.
As per the figures from the American Petroleum Institute, U.S. oil inventories fell by 15.4 million barrels in the week ending on July 28th, compared to analyst estimates of a decrease of 1.37 million barrels.
The data from the American Petroleum Institute also showed that oil inventories declined by 1.7 million barrels compared to estimates indicating a 1.3 million barrel decrease. Additionally, petroleum product inventories decreased by 510 thousand barrels, contrary to analyst estimates of an increase of 112 thousand barrels. The data indicates a strong and rapid demand for fuel in the U.S.
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