Opec+ JMMC says oil market still unstable

The Opec+ alliance must remain flexible in the face of market challenges, as the oil market is more unstable than it appears, Russian energy minister Alexander Novak and Saudi oil minister Prince Abdulaziz bin Salman said ahead of today's Opec+ Joint Ministerial Monitoring Committee (JMMC).

Russia and Saudi Arabia are the de facto leaders of the Opec+ group and are key members of the JMMC, which monitors compliance with output quotas.

Novak said there was still a lot of volatility, although the oil market seemed more stable today. "We are seeing how difficult it is for the market to continue on its recovery path. We are seeing a lot of uncertainty, which is preventing us from coming back to pre-crisis … demand levels," he said.

The Opec+ alliance is scheduled to ease its crude production cuts by almost 2mn b/d at the start of next year, with ministers still resolved to move to the higher quotas, at least publicly. But uncertainties are mounting over the oil market's ability to absorb the extra supply come January, as tightening Covid-19 restrictions hamper oil demand recovery and Libya ramps up crude output.

Saudi oil minister Prince Abdulaziz bin Salman said it was important to remain flexible in the current market. "These are fast-moving times, and … we have to be able to take measures to head off negative trends and developments ... before they become threatening," he said.

He added that there is "still some work to do" for Opec countries which exceeded their crude production quotas in recent months to compensate. The group has pegged its September compliance at a three-month high of 102pc, but it falls to 97pc if the required compensatory cuts are included, according to an Opec document seen by Argus.

Members which overproduced must account for surplus output — including volumes not compensated for in September — by the end of the year, Prince Abdulaziz said. "We have been promised by participating countries they would increase their efforts to compensate in October and that during the months of November and December for them to fulfil all their commitments, including the volumes not compensated in September, and to close this chapter once and for all," he said.

Prince Abdulaziz echoed his warning made ahead of last month's JMMC that oil gamblers will be hurt. "It would be unwise indeed if anybody wants to gamble on our determination," he said. "Destabilising speculation and manipulation have no place in a responsible and efficient market."

Prince Abdulaziz highlighted telephone calls between Saudi Arabia's crown prince Mohammad bin Salman and Russian president Vladimir Putin on 13 and 17 October to discuss the Opec+ agreements as a demonstration of the group's commitment to market stabilisation.

"It should be assuring for the market that we are attending to it with every bit of seriousness and attentiveness … it is a period that needs hands-on attendance," Prince Abdulaziz said.

By Rowena Edwards, Nader Itayim and Ruxandra Iordache