Panels of the OPEC+ groups begin their monthly meetings on Tuesday to discuss the state of oil market and how to proceed with the record production cuts, with analysts widely expecting that the group will ease the cuts by 2 million barrels per day as of August 1.
The Joint Technical Committee (JTC) will hold a meeting on Tuesday, followed by a meeting of the Joint Ministerial Monitoring Committee (JMMC) on Wednesday.
The volatile oil market and the highly uncertain trajectory of global demand recovery has forced the OPEC+ group to have the JMMC hold meetings every month until the end of 2020, instead of ahead of every full OPEC+ meeting only. The panel cannot decide OPEC+ group’s production policy, it can only make recommendations for consideration at the full OPEC and non-OPEC meetings.
OPEC+, led by Russia and OPEC’s top producer Saudi Arabia, agreed in June to extend the record production cuts of 9.7 million bpd by one month through the end of July.
According to the original agreement from April, OPEC+ was to cut 9.7 million bpd in combined production for two months—May and June—and then ease these to 7.7 million bpd, to stay in effect until the end of the year. Then, from January 2021, the production cuts would be further eased to 5.8 million bpd, to remain in effect until end-April 2022.
The group is not discussing any changes to the parameters of the deal for after July, Russia’s Energy Minister Alexander Novak said earlier this month, noting that the producers would thus start to ease the record cuts of 9.7 million bpd to 7.7 million bpd.
Saudi Arabia and most of the members of OPEC+ are in favor of relaxing the cuts as of August, The Wall Street Journal reported over the weekend.
“If OPEC clings to restraining production to keep up prices, I think it’s suicidal,” one unnamed source told the Wall Street Journal. “There’s going to be a scramble for market share, and the trick is how the low cost producers assert themselves without crashing the oil price.”