Saudi Arabia, Russia talk Opec+ ahead of JTC

The two de facto leading members of Opec+ have made a public display of support for the group.

Saudi Arabia's crown prince Mohammad bin Salman and Russian president Vladimir Putin spoke by telephone, and separate statements mentioned the "importance" of the 23-nation alliance. The call included a review of the oil market and efforts to "achieve and maintain stability", according to Saudi state-owned news agency SPA.

The call, which the Russian presidency said was made at the behest of Prince Mohammad, comes ahead of the Opec+ Joint Technical Committee (JTC) meeting tomorrow. The JTC studies market conditions and reports to the Opec+ Joint Ministerial Monitoring Committee (JMMC), which monitors compliance with the group's production cut. The JMMC will meet on 19 October.

Compliance has become a key issue for Opec+, which is enforcing extra production cuts that non-compliers must make by the end of the year to compensate for exceeding quotas in the first few months of the agreement. Opec+ has pledged to remove 7.7mn b/d from the market between August and December, the latest part of a two-year tapered deal that runs until April 2022.

UAE oil minister Suhail al-Mazrouei said yesterday that Opec+ still plans to ease its crude production cuts in January, to 5.76mn b/d, and said that it is unlikely that the compensation mechanism will be extended because the new limits should be easier for member countries to adhere to.

The IEA today said that the plan to taper further from January leaves little room for the market to absorb any extra supply in the coming months, some of which may come from a resurgent Libyan upstream sector if the latest ceasefire holds.

The IEA in its monthly Oil Market Report (OMR) today left its demand forecasts unchanged for this year and for 2021. Opec yesterday also left its 2020 demand projection broadly unchanged and trimmed its forecast slightly for next year.

Saudi state-controlled Aramco's chief executive Amin Nasser yesterday gave a more bullish outlook on the prospect of a demand recovery, albeit one that is dependent on the suppression of Covid-19.

By Ben Winkley