OPEC’s Joint Ministerial Monitoring Committee reports high level of conformity to oil-output cut

KUWAIT, — A joint committee of ministers from OPEC and non-OPEC oil producers today reported a high level of conformity to a global pact to limit supplies, and agreed to review whether the pact should be extended by six months.

The pact was reached at an OPEC/Non-OPEC ministerial meeting, held on 10th December 2016 at which 11 non-OPEC oil-producing countries cooperated with OPEC member countries in a concerted effort to accelerate the stabilisation of the global oil market through voluntary adjustments in combined production of around 1.8 million barrels per day.

There was tangible progress made by OPEC and non-OPEC producers alike, adding that some countries’ commitment levels have eclipsed others, naming Angola and Saudi Arabia as examples, Kuwait’s Minister of Oil Essam Al Marzouq, who is also Minister of Electricity and Water and Chairman of the OPEC’s Joint Ministerial Monitoring Committee (JMMC) was quoted by the Kuwait News Agency as saying.

He underscored that the need for “conformity across the board”, saying that collective efforts are key to achieve 100 percent conformity.

On the magnitude of JMMC’s task, Al Marzouq said that the “committee is under close scrutiny by the international community and financial markets, which highlights the significance of the committee’s work to achieve lasting stability in the oil market.”

Earlier in the day, the JMMC- which comprises three OPEC members- Kuwait, Algeria and Venezuela- and two non-OPEC producers- Russia and Oman convened in Kuwait City for its second meeting and announced that, based on the report of the Joint OPEC/Non-OPEC Technical Committee (JTC) for the month of February 2017, OPEC and participating non-OPEC countries have continued their progress towards full conformity with their voluntary adjustments in production.

The JMMC was established following OPEC’s 171st Ministerial Conference Decision of 30th November 2016, and the subsequent Declaration of Cooperation made at the Joint OPEC/Non-OPEC Ministerial Meeting, held on 10th December 2016.

The resulting declaration, which came into effect on 1st January 2017, is for six months and is extendable for an additional six months, depending on the status of supply and demand, including global inventories.

“The JMMC expressed its “satisfaction with the progress made towards full conformity with the voluntary production adjustments and encouraged all participating countries to press on towards 100 per cent conformity,” the JMMC said in a statement posted on OPEC’s website.

As at February 2017, the OPEC and participating non-OPEC countries achieved a conformity level of 94 per cent, an increase of 8 percentage points over the January 2017 performance. This demonstrates the willingness of all participating countries to continue their cooperation, the committee said.

The JMMC took note that certain factors, such as low seasonal demand, refinery maintenance, and rising non-OPEC supply, have slowed down the positive impact of the production adjustments on inventory drawdowns. At the same time, the liquidation of positions by financial players in the market was also observed, it said.

“However, it was felt that the end of the refinery maintenance season and a noticeable slowdown in the US stock-build, as well as the reduction in floating storage, will support the positive efforts undertaken to achieve stability in the market.”

“In view of the above, the JMMC requested that the JTC with the OPEC Secretariat review the oil market conditions and revert to the JMMC in April 2017 regarding the extension of the voluntary production adjustments as stipulated in the Declaration of Cooperation, in order to ensure market stability.”

The JMMC said that it will deliberate before submitting its recommendation to the participating countries. “This reaffirms the commitment of OPEC and participating non-OPEC countries to continue to cooperate for the benefit of producers and consumers alike, as has been consistently advocated,” the JMMC added.

Source: Emirates News Agency