Opec+ meetings delayed over baseline change plans

Today's meeting of the Opec+ Joint Ministerial Monitoring Committee (JMMC) has been delayed by several hours as discussions around reworking production baselines drag on.

The meeting, which was originally due to begin at 10:00 Vienna time (08:00 GMT), was formally pushed back by an hour, according to a circular issued by the Opec secretariat, to allow more time for multilateral and bilateral discussions. But by 16:20 Vienna time, two delegate sources said the JMMC had yet to convene as pre-meeting discussions on the sidelines continue.

At the heart of those pre-meeting talks is a plan to recalibrate crude output baselines for several countries in the Opec+ coalition in order to better reflect their current production capacities. Baselines ꟷ the production level on which individual countries' cuts are calculated under the Opec+ deal ꟷ have been a point of contention for a number of members in the group who believe they should be allowed to pump more than they currently are.

In 2021 the UAE triggered a several-day impasse in production policy talks after insisting that its original baseline was no longer relevant given the amount its output capacity had grown since. The UAE was eventually granted an increase in its baseline to 3.5mn b/d from 3.17mn b/d, although it had been hoping for higher. Saudi Arabia, Russia, Kuwait and Iraq were also granted higher baselines at that meeting.

Today, the UAE is again one of the countries pushing to secure an increase in its baseline to bring it closer to its now 4.2mn b/d crude production capacity. Delegates say South Sudan is another hoping to be granted an increase. While some countries are pushing for higher baselines, others in the group have consistently struggled to deliver on their production targets and may be be asked to accept lower baselines, again to better reflect the realities on the ground. Delegates said several of the latter are sub-Saharan African members.

In April, the latest month for which production data are available, Nigeria and Angola together produced 860,000 b/d below their combined targets, according to Argus estimates, while Equatorial Guinea and Congo (Brazzaville) were 50pc and 20pc below their respective quotas.

Despite the delay, one delegate said that discussions are "all going well" and that there were just "formalities" left to deal with. A second said the talks should begin to bear fruit soon, allowing for the formal start of the JMMC meeting. Opec+ ministers will hold a full ministerial meeting once the JMMC meeting concludes.

By Nader Itayim, Bachar Halabi and Aydin Calik