JMMC postpones output recommendation till June: Update

Adds detail throughout

A meeting of the Joint Ministerial Monitoring Committee (JMMC) of Opec and allied producing nations — known as Opec+ — ended in Jeddah without making any formal output recommendation to the 24-member group, citing "uncertainties" besetting the market.

The JMMC will meet in the days before the end-June full ministerial meeting to review scenarios and prepare a final proposal.

The communique issued after the meeting referred to "critical uncertainties" affecting markets and macroeconomics, including the ongoing trade dispute between the US and China, monetary policy and "geopolitical challenges".

Following the meeting, Saudi oil minister Khalid al-Falih noted that there was a general consensus for keeping the current Opec+ agreement in place during the second half of this year to allow global stocks to gradually drain, but added that the group could decide to make changes to the agreement and ease the output restrictions if the market required.

"With 14 ministers present [at today's meeting], you can expect a range [of proposals]," al-Falih said. But "the one that seemed to resonate the most with a large number of ministers is simply to roll over the agreement in the first half, while also noting that things could change between now and then."

The meeting asked the Opec+ Joint Technical Committee (JTC) and Opec secretariat to continue monitoring and analysing oil market developments, particularly oil inventory projections, and report to the JMMC when they next meet in Vienna, ahead of the 25-26 June Opec and Opec+ meetings.

"We supported [the idea] that we should not be making a decision until more data, more accurate predictions and more concrete information is available to us in the coming few weeks," al-Falih said. Although "we will not be 100pc sure [by end-June] what will happen in July and August… there is a point that there will be some things that will clear up in the next few weeks," he said.

The JMMC put overall conformity with the production cut agreement at a record high 168pc in April, and 120pc on average in the first four months of the year.

But, as has become commonplace since the Opec+ group began managing the market in 2017, Saudi Arabia is shouldering much of the current overall reduction, with its production some 500,000 b/d below the 10.3mn b/d it pledged to cap its production at under the deal.

"While we draw comfort from [the record high conformity], we also note that conformity is uneven, with some countries contributing more than others," al-Falih said. "We heard in our discussions commitment from those countries that are contributing less…to raise their conformity, and we believe them."

As per Argus estimates, Iraq and Nigeria were the two least compliant Opec producers in April, producing 90,000 b/d and 180,000 b/d above their output caps, respectively.

Al-Falih also moved to reassure consumers that Saudi Arabia would stand ready to quickly increase output to meet additional consumer demand, when, and if, it materialises.

"Many may be concerned that there could be a shortage of supply. But I can assure them that their demand will be met," al-Falih said. "We will be responsive. We already have 550,000 b/d below our production limit that we can deploy readily, and that is a lot of oil."

Saudi Arabian production stood at 9.8mn b/d in April, according to Argus estimates, relatively steady with its March output. But, as of now, Saudi Arabia is planning to produce "around 9.7-9.8mn b/d" through to June.

"If there is a need to revisit out target production because there is a massive disruption somewhere, or a shortage somewhere, we already showed last year that we can come back to the table in short order and readjust our targets," al-Falih said.