OPEC+ Maintains Current Production Policy
The joint ministerial monitoring committee meeting (JMMC) of OPEC+ concluded on Wednesday, with the decision to leave the current production policy unchanged. The plan to increase output starting in December remains in place.
Committee's Emphasis on Compliance
In a statement released after the meeting, OPEC emphasized the importance of full conformity and compensation. The Committee will continue to assess market conditions and has issued a warning to cartel members who persistently produce above their quota.
Warnings of Potential Price Drops
According to a report by the Wall Street Journal, Saudi Energy Minister Prince Abdulaziz bin Salman allegedly warned OPEC+ ministers that oil prices could drop to $50 per barrel if members continue to violate their quota agreements. Iraq and Kazakhstan are frequently cited as the main violators of the output-cut agreement. Both countries have claimed compliance in September, but official figures will not be available for verification until next week.
Saudi Arabia's Efforts to Restrict Supply
Saudi Arabia has been making significant efforts to restrict supply to the market for over a year, as part of its strategy to raise its price target and regain market share. In addition to its share of the OPEC+ cuts, Saudi Arabia is voluntarily keeping an additional 1 million barrels per day off the market. The Kingdom has been producing "around 9 million bpd", in line with its targeted oil output over the past year.
OPEC Refutes WSJ Report
However, OPEC refuted the WSJ report, stating that no conference call took place where the Saudi Arabian Energy Minister allegedly warned of a potential price drop to $50 per barrel. OPEC also denied the alleged quote attributed to the Minister, stating that these claims were unfounded and lacked credibility.
Speculations Regarding the Biden Administration
The denial from OPEC led to speculations that the Biden administration was pretending to be "OPEC sources" and leaking fake news to Reuters, WSJ, and FT.
OPEC+ Output Cuts and Future Plans
Currently, total OPEC+ output cuts amount to 5.86 million bpd. In December, OPEC+ plans to increase output by 180,000 bpd as it unwinds cuts.
Bottom Line
The decision by OPEC+ to maintain its current production policy reflects the challenges faced in balancing market demands and production quotas. As the market continues to evolve, it will be interesting to see how OPEC+ adjusts its strategies to maintain stability. What are your thoughts on this development? Feel free to share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
