PREVIEW - OPEC+ To Start Meetings On Wednesday To Decide Future Volume Of Oil Production Cuts

MOSCOW (Pakistan Point News / Sputnik - 03rd March, 2021) The OPEC+ Joint Ministerial Monitoring Committee (JMMC) will convene on Wednesday and will be followed by the oil producing alliance's Ministerial Meeting on Thursday, where the future volume of oil production cuts would be determined.

The JMMC on Wednesday will oversee the compliance of the OPEC+ participants with the oil production quotas. According to the International Energy Agency (IEA), the compliance reached 103 percent in January, its highest level since June. The committee will also revise how the underperfoming countries are offsetting their production shortcomings from the previous months.

At the OPEC Ministerial Meeting, the volume of oil production cuts in April and in the following months would be on the agenda. The OPEC+ countries were required to cumulatively slash production by 7.2 million barrels a day (mbd) in January, while in February the quota eased to 7.125 mbd and in March to 7.05 mbd, mainly due to slight increase in oil production granted only to Russia and Kazakhstan.

Beyond the required OPEC+ quotas, Saudi Arabia has been contributing a voluntary oil production cut of 1 mbd in February and March and some other OPEC+ members have been additionally slashing 425,000 barrels daily over the same period.

A source in one of the OPEC+ delegations has told Sputnik that most of the alliance's nations are in favor of boosting oil production by 0.5 mbd starting in April. However, another source has told Sputnik that the positions of Saudi Arabia, a leader of OPEC, and Russia, a non-OPEC leader, diverge on the future volume of oil cuts. Riyadh will likely push for keeping the output at the current level and will call for a cautious approach, while Russia usually favors increasing the oil output, according to the source.

So far, Kremlin has only said that the preparations for OPEC+ meeting are ongoing, but declined to comment on Moscow's expectations as "these meetings love silence."

As for the oil demand expectations, both IEA and OPEC slightly downgraded their forecast last month. OPEC expects the oil demand to grow by 5.8 mbd this year as the extended lockdowns may affect the consumption in the first half of the year. IEA forecast the demand to grow by 5.4 mbd and expects that demand will accelerate recovery in the second half of 2021.