Opec+ JMMC recommends sticking with output policy

The Opec+ Joint Ministerial Monitoring Committee (JMMC) has recommended sticking with the group's policy to increase crude production in June and July, three delegates told Argus.

As per the current agreement, the group's collective output ceiling rose by 350,000 b/d in May and is due to go up by another 350,000 b/d this month and by 441,000 b/d in July. These increases coincide with Saudi Arabia's plan to gradually unwind its additional 1mn b/d output cut in the May-July period.

Two issues have loomed ahead of today's Opec+ meeting, which is scheduled to begin at 14:30 Vienna time (13:30 BST). A sharp rise in Covid-19 cases in India since the start of the second quarter has undermined demand projections for the first half of the year. And ongoing talks in Vienna over Washington's return to the 2015 Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), have raised the prospect of US sanctions on Iran being lifted, which could trigger a gradual recovery in Iranian crude output to pre-sanctions levels of around 3.8mn b/d from 2.4mn b/d now, according to Argus estimates. But the speed of any growth in Iranian production will ultimately depend on how quickly a deal can be reached.

These pressures have been balanced to some extent by a reduction in OECD stocks back to around 2015-19 levels and a limited rise in US shale output. Kuwait's oil minister Mohammed Abdul Latif al-Fares said today that the oil market "will be able to absorb the gradual production increases" planned by Opec and its non-Opec partners over the next couple of months as global oil demand gains support from Covid-19 vaccine programmes.

By Rowena Edwards, Ruxandra Iordache and Nader Itayim