No Surprise from OPEC+: Q4 Oil Output to Increase as Planned
Commerzbank’s analyst Carsten Fritsch reports that the Joint Ministerial Monitoring Committee (JMMC) of OPEC+ has chosen not to alter its production strategy during yesterday’s virtual meeting. This decision was anticipated based on prior statements from informed sources.
As a result, the previously announced gradual increase in oil production, set to begin in the fourth quarter, will proceed as planned for now. However, the actual implementation of this plan hinges on market conditions, as emphasized by representatives from Saudi Arabia and Russia.
The recent 8% decline in oil prices since mid-July, driven by demand concerns, may have prompted OPEC+ to reassess the ambitious nature of its intended supply boost. If demand growth falls short of expectations, the planned increase may be revisited.
Furthermore, Iraq, Kazakhstan, and Russia have once again committed to fully adhering to the agreed-upon production cuts, despite failing to do so in the past. Iraq, in particular, has consistently exceeded its production limits until recently.
In summary, while OPEC+ has stuck to its production plan for now, the situation remains fluid and subject to change based on market developments.