The Joint Ministerial Monitoring Committee of the OPEC+ group is expected to recommend keeping the current levels of oil production when it meets next week, in a wait-and-see approach amid significant uncertainties about supply and demand in the coming weeks, OPEC+ delegates told Bloomberg on Tuesday.
The JMMC is meeting online on February 1 to review the situation on the oil market and potentially recommend actions for the OPEC+ alliance to take.
However, in view of the uncertainties about Chinese demand and Russian supply in February and March, OPEC+ is widely expected to keep the current production levels, which reduced target output by 2 million barrels per day (bpd) from November onwards. Yet, the actual cut is estimated to have been around 1 million bpd.
In December, OPEC-13’s average December production rose by 91,000 bpd, according to the MOMR, to 28.971 million bpd, with nearly all of the gains coming from Nigeria. But December’s OPEC-10 production – the members bound by the OPEC+ pact – was still substantially below the production quota, with the group underproducing by more than 800,000 barrels per day.
Going forward, OPEC, OPEC+, and market participants will look to China and Russia for the most immediate clues on global demand and supply.
Analysts and the market expect Chinese oil demand to rebound after the reopening of the world’s largest crude oil importer after nearly three years of Covid-related lockdowns.
Saudi oil giant Aramco expects the Chinese reopening and a pick-up in jet fuel demand to lead to a rebound in global oil demand this year, Amin Nasser, the CEO of the world’s biggest oil firm, told Bloomberg in an interview last week.
On the supply side, the upcoming EU embargo on seaborne imports of refined petroleum products from Russia – beginning on February 5 – could lead to curtailments in Russian crude oil production.
Moreover, Brent oil prices have recently stabilized in the upper $80s, which could mean that OPEC+ will not rush to change production policy just ahead of the EU embargo on Russian diesel and other products, analysts say.