By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC)’s Joint Ministerial Monitoring Committee (JMMC) will hold its monthly meeting on Monday, October 19.
The committee, which oversees compliance, will assemble to discuss the way forward concerning the current condition of the market as demand worries have taken over the market with returning rise in COVID-19 cases in the United States and Europe.
There have been considerations that the 23-country OPEC+ alliance in the midst of a 7.7 million barrels per day production cut accord till December may have to extend this to a later date.
It had been scheduled to shrink to 5.8 million barrels per day from January 2021 through April 2022, in anticipation of improving demand as the world recovers from the coronavirus pandemic.
However, with oil prices hovering in the low $40 per barrel in recent weeks and Libya, which is exempt from the cuts, rapidly restoring production, the oil market has been speculating whether OPEC+ will extend its current quotas or even tighten them.
Any changes would need to be approved unanimously by the entire bloc who might recommend this at today’s meeting or when the full coalition meets November 30 to December 1.
Analysts have noted that a full rebound may not be possible until a COVID-19 vaccine is available and travel restrictions are lifted and this may not be possible till the second quarter of 2021.
Meanwhile, according to a report, the group’s compliance with its collective crude production cut hit a three-month high of 102 per cent in September, according to an OPEC source.
The month-on-month improvement was driven by the 10 OPEC participants increasing their combined compliance rate to 105 per cent last month from 102 per cent in August.
Discipline among their non-OPEC counterparts dropped slightly, with compliance dropping to 97 per cent from 99 per cent.
Compliance numbers are preliminary until confirmed during Monday’s meeting.
Last month’s improved compliance comes amid a Saudi-led drive to tighten discipline and the creation of a compensation mechanism that obliges overproducers to make additional cuts.
September marked the second month of the second phase of the group’s two-year production supply cut pact.
Business Post had reported that the deal called for a combined 9.7 million barrels per day production cut from May to July, while it was eased to 7.7 million barrels per day for the rest of the year.
