OPEC reiterates importance of attaining full conformity for market stability
Meeting of the OPEC and Non-OPEC's Joint Ministerial Monitoring Committee, JMMC, took place via videoconference on Wednesday 19 August 2020, under the Chairmanship of Prince Abdul Aziz Bin Salman, Saudi Arabia’s Minister of Energy, and Co-Chair Alexander Novak, Minister of Energy of the Russian Federation, Trend reports citing Zawya.
The Committee reviewed the monthly report prepared by its Joint Technical Committee, JTC, and developments in the global oil market since its last meeting on 15 July 2020. The Committee also considered market prospects for the second half of 2020 and for 2021.
The Committee emphasised the ongoing positive contributions of the Declaration of Cooperation, DoC, in supporting a rebalancing of the global oil market. It recalled the historic decisions taken by all Participating Countries in the DoC at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting on 12 April 2020 to adjust downwards overall crude oil production, and the unanimous decisions taken at the 179th Meeting of the OPEC Conference and the 11th OPEC and non-OPEC Ministerial Meeting on 6 June 2020.
The outcomes of the June Meetings extended the first phase of the production adjustments until 31st July, 2020; provided a compensation mechanism for participating countries that could not achieve full conformity; and endorsed monthly meetings of both the JMMC and the JTC to strengthen monitoring and keep abreast of very dynamic market fundamentals.
The Committee reviewed the crude oil production data for the month of July 2020 and welcomed the significant performance in overall conformity for participating OPEC and non-OPEC countries of the DoC, which was recorded at 97 per cent in July 2020, including Mexico as per the secondary sources.
The Members of the JMMC reaffirmed their commitment in the DoC to achieve full and timely conformity. In addition, the underperforming Members of the Committee reaffirmed their commitment to compensate for the shortfalls in May, June, and July 2020 by the end of September 2020. It also requested other underperforming participating countries to submit their plans for implementation of the required compensation for the overproduced volumes to the OPEC Secretariat by the end of next week, 28th August, 2020.
The Committee emphasised that achieving 100 per cent conformity from all participating countries in the DoC and compensating for the shortfalls in May, June and July 2020 is not only fair, but vital for the ongoing rebalancing efforts and to help deliver long-term oil market stability.
It instructed the JTC and the OPEC Secretariat to closely monitor and report to the JMMC on the implementation of the required compensation by the underperforming participating countries as stipulated in their plans.
The Committee observed that there are some signs of gradually improving market conditions, including the inventory build in July 2020 being reversed and the lessening of the gap between global oil demand and supply. Nevertheless, the pace of recovery appeared to be slower than anticipated with growing risks of a prolonged wave of COVID-19.
It underscored the fragility of the market and significant uncertainties, particularly associated with oil demand, and called for vigilance by all participating countries.
The Committee thanked the JTC and the OPEC Secretariat for their contributions to the meeting.
The next meetings of the JTC and the JMMC are scheduled for 16th September and 17th September, 2020, respectively.