OPEC+ is set to meet on Monday, but delegates from the organization said that it would likely stick to its current production cut plan.
Oil prices have sagged over the last couple of weeks, dragged down by the collapse of two US banks. Despite the low prices, OPEC+ has sent clear signals to the market: it is staying the course and will not react to the sudden price crash.
Another factor that OPEC+ must weigh in its decision-making is the 450,000 bpd export loss from OPEC member Iraq—OPEC’s second-largest producer, from the Kurdistan region over a dispute between Turkey and Iraq over KRG’s control over the region’s oil exports.
Oil has rebounded somewhat in the last week, in part thanks to Iraq’s export disruptions, although prices have yet to recover fully from the sub-$73 Brent crude of the week prior. Before the collapse of SVB bank, Brent was trading above $86 per barrel. Prices have since rebounded to just over $78 as of Thursday morning.
On Monday, the OPEC+ group will hold a virtual meeting of the Joint Ministerial Monitoring Committee (JMMC)—which includes the group’s two largest crude oil producers, Saudi Arabia and Russia. The group is expected to weigh the current market balance, Iraq’s disruption, and the price drop due to the banking collapse.
One delegate told Reuters that Iraq’s production loss is not a significant enough event to prod the group to make changes to the plan that it had laid out for the entire 2023.
“It is hard to expect any new development,” one OPEC+ delegate told Reuters in reference to the JMMC meeting.
OPEC+ agreed last year to cut oil production as a group by 2 million barrels per day—an agreement that was designed to run through the rest of this year.
If the OPEC+ delegate comments aren’t enough to persuade the market that the upcoming meeting will see OPEC+ take no action to alter the production cuts, Saudi Arabia’s energy minister has openly said that OPEC+ will stick to its current targets through the rest of this year.
By Julianne Geiger for Oilprice.com