…as Ministerial Meeting highlights importance of ongoing rebalancing efforts
The Overall conformity to the production adjustments by OPEC and non OPEC member was 115% in March 2021, reinforcing the trend of high conformity by the Participating Countries.
The Meeting expressed its appreciation to the Participating Countries that performed beyond expectation in March 2021, with total over conformed volumes of 1.23 mb/d. However, some Participating Countries have yet to achieve the minimum expectation of 100% conformity and to compensate for over produced volumes.
The group made this known at its the 16th OPEC and non-OPEC Ministerial Meeting of the Declaration of Cooperation (DoC) which took place via teleconference on Tuesday, 27 April 2021, under the Chairmanship of HRH Prince Abdul Aziz bin Salman, Saudi Arabia’s Minister of Energy, and Co-Chair HE Alexander Novak, Deputy Prime Minister of the Russian Federation.
The Meeting emphasized the ongoing positive contributions of the Declaration of Cooperation in supporting a rebalancing of the global oil market in line with the historic decisions taken at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting (ONOMM) on 12 April 2020 to adjust downwards overall crude oil production, and subsequent decisions.
It also highlighted the continuing recovery in the global economy, supported by unprecedented levels of monetary and fiscal support, while noting that the recovery is expected to pick up speed in the second half of the year.
The Ministerial Meeting emphasized, however, that COVID-19 cases are rising in a number of countries, despite the ongoing vaccination campaigns, and that the resurgence could hamper the economic and oil demand recovery.
The monthly report prepared by the Joint Ministerial Monitoring Committee (JMMC) was reviewed, including the crude oil production data for March 2021, and welcomed the positive performance of the Participating Countries.
The Meeting further noted that DoC Participating Countries pledged to achieve full conformity and make up for previous adjustment shortfalls during the extended compensation period, which runs through the end of September 2021, and stressed the importance of accelerating the market rebalancing efforts without delay.
It reminded all Participating Countries to remain vigilant and flexible given the uncertain market conditions.
They expressed their gratitude to Saudi Arabia, for the significant additional voluntary supply adjustment of 1 mb/d it made in April 2021 and a gradual return of these volumes in May, June and July 2021, given the prevailing uncertainties surrounding the pace of the oil demand recovery.
It also observed the destocking trend of commercial OECD inventories, but noted that they increased by 14.4 mb in March 2021 and were 77.4 mb above the 2015-2019 average.
“Under the referred circumstances, the Ministerial Meeting decided on the continued implementation of the production adjustment decision of the 15th OPEC and non-OPEC Ministerial Meeting”.
It was decided that the 30th JMMC Meeting and the 17th OPEC and non-OPEC Ministerial Meeting will take place on 1 June 2021. The Meeting thanked the JMMC, Joint Technical Committee (JTC) and the OPEC Secretariat for their contributions to the meeting.
Oil prices posted some modest gains on Tuesday, despite the worsening conditions in India. “If the grim trend continues, the oil demand loss India will experience could be the single largest reduction in absolute terms that any country has suffered since the beginning of the pandemic,” Rystad Energy said in a note. The firm added that there is some optimism around the plans by OPEC+. “Should OPEC+ turn a blind eye to India though, the gains may quickly evaporate,”
The OPEC+ group will not hold a full ministerial meeting today, Wednesday as planned, delegates at the Joint Ministerial Monitoring Committee (JMMC) agreed at their meeting on Tuesday, signaling confidence in the current plans to ease the production cuts as of May despite surging COVID cases in major oil importer India.