<article><p class="lead">Saudi Arabia's oil minister Abdulaziz bin Salman said today that the Opec+ coalition's production cuts will exceed the planned 7.7mn b/d level in August because of compensatory reductions from countries that overproduced at the start of the group's two-year phased agreement. </p><p>As it stands, the deal calls for the Opec+ group to ease its collective production cut to 7.7mn b/d in August-December from 9.6mn b/d in July and 9.7mn b/d in May and June, largely from an October 2018 baseline. The Saudi oil minister's comment, delivered ahead of a meeting of the group's Joint Ministerial Monitoring Committee (JMMC), suggests that the group is likely to shift to the 7.7mn b/d reduction next month as planned, as opposed to extending deeper cuts for another month. </p><p>Abdulaziz bin Salman said that this transition will "barely" be felt in international oil markets, as much of the additional volume will be consumed by Opec+ members domestically amid higher seasonal demand. Saudi Arabia's own demand will go up by an estimated 500,000 b/d in August, he said. </p><p>He added that next month's reductions will be deeper than the headline 7.7mn b/d figure because countries that overproduced in May and June are obliged to make up for their surplus output with additional cuts in the coming months. These compensation obligations remain in place, Russian oil minister Alexander Novak said today. </p><p>Novak also stressed the importance of continually monitoring the market. He and Abdulaziz bin Salman both flagged up a recovery in demand as Covid-19 restrictions ease, pointing to an increased number of flights, as well as rising gasoline and diesel sales. Given these factors, the "slight easing at the second phase [of the Opec+ deal] is justified", Novak said. </p><p>Today's JMMC meeting follows yesterday's assembly of the Opec+ group's Joint Technical Committee (JTC), which monitors market conditions. Two Opec+ delegates said yesterday that the group as a whole <a href="https://direct.argusmedia.com/newsandanalysis/article/2122942">was 107pc compliant with the cuts in June</a>, with non-Opec participants hitting 99pc and Opec participants 112pc. </p><p>Last month's overcompliance by Opec members was partly down to additional production cuts voluntarily undertaken by Saudi Arabia and its Mideast Gulf allies Kuwait and the UAE. Without those extra reductions, the group would have been just 95pc compliant, according to the Saudi oil minister. </p><p class="bylines">By Ruxandra Iordache, Nader Itayim, Samira Kawar and Anastasia Krasinskaya</p></article>
