OPEC+ holds policy steady as Riyadh, Moscow keep cuts

An OPEC+ ministerial panel that met on Wednesday made no changes to the group’s oil output policy, after Saudi Arabia and Russia said they would keep voluntary supply cuts in place to support the market.

Ministers from the Organisation of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, held an online meeting. The panel, named the Joint Ministerial Monitoring Committee (JMMC), can call for a full OPEC+ meeting, if warranted. Oil has jumped towards $100 a barrel for Brent crude, the highest since 2022, although prices have come under pressure in recent days from concerns that interest rates may remain persistently high and from weaker economic growth.

“The committee will continue to closely assess market conditions,” an OPEC statement issued after the meeting said, adding that the panel recognised and acknowledged the Saudi and Russian cuts.

Earlier on Wednesday, Saudi Arabia said it would continue with a voluntary cut of 1 million barrels per day (bpd) until the end of 2023, while Russia said it would keep a 300,000 bpd voluntary export curb until the end of December.

Russian Deputy Prime Minister Alexander Novak, speaking on the Rossiya-24 news TV station, said the joint cuts by Saudi Arabia and Russia had helped to balance the global oil market. “We are also fulfilling our obligations in full,” he said.

Saudi Energy Minister Prince Abdulaziz bin Salman, who chairs the JMMC, last month said OPEC+ cuts were needed to stabilise the market, and prices were not being targeted.

Ahead of the meeting, OPEC+ sources had told Reuters that the policy was likely to remain steady, although with oil rallying, some analysts had cited an increasing probability the Saudi voluntary cuts will be reduced.

The Saudi and Russian supply cuts are on top of earlier curbs announced since late 2022. The next JMMC meeting is on November 26, the statement said, the same day as the next scheduled full meeting of OPEC+ to decide policy. Later on Wednesday, oil prices fell by over $3 a barrel, as demand fears stemming from macroeconomic headwinds offset pledges by Saudi Arabia and Russia to continue crude output cuts to the end of 2023.

Brent crude oil futures were down $3.30, or 3.63%, to $87.62 a barrel at 1456 GMT while US West Texas Intermediate (WTI) crude fell $3.29, or 3.69%, to $85.94.

Brent traded at its lowest since September 1 during the session, with an intra-day low of $87.55 a barrel by 1456 GMT. WTI’s intra-day low of $85.86 was the lowest since September 5.

US nationwide crude stocks fell by 2.2 million barrels to 414.1 million barrels in the week to September 29, but stocks at Cushing, Oklahoma rose for the first time in eight weeks, according to the Energy Information Administration (EIA).

Gasoline stocks rose by 6.5 million barrels, compared with expectations of a 200,000-barrel rise, according to a Reuters’ poll.

Published in The Express Tribune, October 5^th, 2023.

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