Opec+ JMMC warns of 'bumpy road ahead'

Opec+ ministers struck a cautious tone today ahead of a meeting of the group's Joint Ministerial Monitoring Committee (JMMC), warning that the coalition faces a "long and bumpy road ahead" despite growing optimism over potential Covid-19 vaccines.

The Opec+ group is scheduled to ease its crude output cuts by almost 2mn b/d in January as it enters the final stage of the current agreement. But pressure to review this move has been mounting in recent weeks, and Opec+ sources said an extension of the current cuts by 3-6 months is being considered.

The JMMC does not decide output policy but it can make recommendations, and the changing market could push it to propose keeping the current cuts in place into 2021.

"I recently said we must be ready to tweak our agreements if necessary. We must be prepared to act according to the requirements of the market," Saudi oil minister Prince Abdulaziz bin Salman said ahead of the JMMC meeting.

"It has been a month of fast-paced developments. There has been very good news of possible vaccines against the Covid virus, allowing us to see some glimmers of light at the end of the tunnel," he said.

The Saudi oil minister, who co-chairs the JMMC, cited a resilient recovery in demand in Asia, specifically in China and India, as another cause for optimism but noted that this is overshadowed by a surge in global Covid-19 infections, re-imposed lockdowns in Europe and the return of Libyan crude production to the market.

"This virus still has the potential to upset recovery plans. There is still a way to go until we reach the other side of the long-awaited pandemic tunnel," he said.

Some of the group's previous quota-busters still have a long way to go to fully compensate for past overproduction, according to figures presented yesterday at a meeting of the Opec+ Joint Technical Committee (JTC). But Prince Abdulaziz said he is encouraged by the efforts made so far, highlighting reduced output from recent laggards UAE and Angola in particular. This was echoed by Russia's former energy minister Alexander Novak, who continues to lead Moscow's delegation despite his promotion to deputy prime minister. "We have to continue being committed and we have to continue being professional in this matter, especially as we're going into a seasonally low-demand season, which is winter," Novak said.

Algeria's oil minister and current Opec president Abdelmajid Attar warned that the group faces "a long and bumpy road" and any wrong move could be "catastrophic".

"We expect the global economy to gradually recover in 2021, reaching 4.4pc growth. However, this trend is uncertain and requires a great deal of vigilance on our part," Attar said.

By Adal Mirza, Ruxandra Iordache, Nader Itayim, Samira Kawar and Anastasia Krasinskaya