A meeting of top ministers of the Organisation of Petroleum Exporting Countries and its allies known as (OPEC+) on Thursday kept oil output policy unchanged.
This included a plan to start unwinding one layer of output cuts from October, but the oil cartel repeated that the hike could be paused or reversed if needed.
The OPEC ministers and allies led by Russia, or OPEC+ as the group is known, held an online joint ministerial monitoring committee meeting (JMMC).
OPEC+’s policy as agreed in June called for some members to gradually phase out cuts of 2.2 million barrels per day from October 2024 to September 2025. The group also agreed to extend earlier cuts of 3.66 million bpd until end-2025.
However, although it currently has a monthly production quota of 1.58 million barrels per day, Nigeria has for over four years been unable to meet its allocation.
After a low of 900,000 bpd in 2022, the country has struggled to raise output slowly, hitting 1.28 million bpd in April, 1.25 million bpd in May and 1.27 million bpd in June. The country blames massive oil theft, pipeline vandalism as well as years of underinvestment for the challenge.
In a statement after Thursday’s meeting, OPEC+ said the members making the 2.2 million bpd of voluntary cuts “reiterated that the gradual phase-out of the voluntary reduction of oil production could be paused or reversed,” depending on market conditions.
Oil prices had fallen from a 2024 high above $92 a barrel in April to below $82, pressured by concern about the strength of demand but finding support this week from increasing tensions in the Middle East.
Thursday’s meeting also noted assurances from Iraq, Kazakhstan and Russia made during the meeting to achieve full conformity with pledged output cuts, the statement said. Those countries had earlier delivered plans to compensate for past overproduction.
“The JMMC reviewed the crude oil production data for the months of May and June 2024 and noted the high overall conformity for participating OPEC and non-OPEC countries of the Declaration of Cooperation (DoC).
“The committee noted the Republic of Iraq, the Republic of Kazakhstan, and the Russian Federation assurance during the meeting to achieve full conformity and welcomed the recent submission of their compensation plans for the overproduced volumes since Jan 2024 to the OPEC secretariat.
“During today’s meeting (Thursday), the member countries that participated in the June 2nd, 2024 meeting in Riyadh along with Oman, reiterated that the gradual phase-out of the voluntary reduction of oil production could be paused or reversed, depending on prevailing market conditions.
“These countries had announced the extension of the voluntary reduction of oil production by 2.2 million barrels per day until the end of September 2024 and outlined plans for this reduction to be gradually phased out on a monthly basis until the end of September 2025.
“The committee will continue to monitor the conformity of the production adjustments decided at the 37th ONOMM held on June 2, 2024, including the additional voluntary production adjustments announced by some participating OPEC and non-OPEC countries and will continue to closely assess market conditions,” the statement following the online meeting stressed.
The next meeting of the JMMC (56th) is scheduled for October 2, 2024.
The JMMC, which groups the oil ministers of Saudi Arabia, Russia and other leading producers, usually meets every two months and can make recommendations to the wider OPEC+ group.
Meanwhile, oil prices extended gains on Thursday after the killing of a Hamas leader in Iran raised the threat of a wider Middle East conflict and concern over its impact on oil.
Earlier, global benchmark Brent crude futures rose 71 cents, or 0.9 per cent, to $81.55 a barrel. US West Texas Intermediate crude gained 72 cents, also 0.9 per cent, to $78.63.
The most active contracts on both benchmarks jumped about 4 per cent in the previous session, Reuters reported.
Hamas leader Ismail Haniyeh was killed in the Iranian capital Tehran on Wednesday. With Israel’s killing less than 24 hours earlier of Hezbollah’s most senior military commander in Beirut, concerns rose that the 10-month war in Gaza between Israel and Hamas was turning into a wider conflict that could disrupt oil supply from the region.
Also pushing up prices was data from the US Energy Information Administration (EIA) showing robust export demand pushed US crude oil stockpiles down by 3.4 million barrels in the week ended July 26.
Emmanuel Addeh
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