OPEC+ committee recommends to stay put on output policy

VIENNA, Austria  -A committee of major oil producers recommended Friday to keep the cartel’s current output strategy unchanged after heavyweights Saudi Arabia and Russia extended their cuts despite recovering prices.

Oil prices have picked up in recent months due to high demand coupled with tighter supply, sending the price for Brent crude up to $85 a barrel — its highest level in over three months.

Following Russia’s invasion of Ukraine in February 2022, oil peaked at more than $130 dollars per barrel.

In a virtual meeting on Friday, the group’s Joint Ministerial Monitoring Committee (JMMC) “reaffirmed the commitment of its member countries” to the production reduction strategy “which extends to the end of 2024”, a press release said.

The JMMC also expressed its “appreciation for the kingdom (of Saudi Arabia)’s additional voluntary cut of one million barrels per day (bpd)”, which the country had extended until September on Thursday in an effort to prop up prices.

In addition to Riyadh’s cut that took effect in July, a further cut of 300,000 bpd for September was announced by Russian deputy prime minister Alexander Novak.

For the month of August, Moscow had pledged to cut production by 500,000 bpd.

In June, the 13 members of the Organization of the Petroleum Exporting Countries (OPEC) headed by Riyadh and their 10 allies led by Moscow agreed to reduce output in 2024.

Recently, signs have emerged that supply cuts are starting to have the desired effect despite concerns about the health of the global economy.

However, Saudi Arabia is expected to “gradually withdraw the voluntary cut over the coming months” and return to the agreed production level of ten million bpd to avoid “considerable revenue shortfalls… and dampening economic growth,” said Commerzbank analyst Carsten Fritsch.

The next JMMC meeting is set for October 4, according to a statement from the group.

The group’s next ministerial meeting is scheduled for November 26.

The JMMC has no decision-making power but discusses market conditions and makes recommendations, which are then formally discussed and decided at the organization’s ministerial meetings.