OPEC+ confirms plans to lower production cuts in August

The 20th meeting of the Joint Ministerial Monitoring Committee (JMMC) took place via videoconference yesterday as OPEC+ confirmed plans to lower the curbs to 7.7 million bpd from August.

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 18 June 2020. The Committee also considered market prospects for the second half of 2020.

The JMMC said it will continue to cut back 9.7 million barrels per day of production until the end of July but will now lower the curbs to 7.7 million bpd from August.

OPEC+ registered compliance of 89 per cent during July 20, translating into an 8.6 million bpd cut (out of the 9.7 million bpd target).

Senior Oil Markets Analyst at Rystad Energy Paola Rodriguez-Masiu stated: “Although laggards are set to deepen cuts for Aug-20 and Sep-20 to “made up” for falling short their past target, we find unlikely that they will be able to achieve 100 per cent of compliance.  In the case of Iraq, we believe that the target set to compensate the alliance is overambitious given Iraq’s dire economic need for oil revenues right now. Getting the country’s production below 4 million bpd will be an uphill battle.

The JMMC Committee said in a statement that there were encouraging signs of improvement as economies around the world open up.

“While there could be localised or partial lockdowns re-imposed in some places, the recovery signs are clear, both in physical and futures markets.”

Opec’s joint technical committee will next meet on August 17, while the JMMC will convene on August 18.