The Organization of Petroleum Exporting Countries (OPEC+) is likely to maintain its current oil output policy during an upcoming panel meeting on Friday, according to six OPEC+ sources who spoke to Reuters. This decision comes as a result of tighter supplies and strong demand driving an ongoing oil price rally.
On August 4, ministers from OPEC and their allies, led by Russia, will convene. The meeting, known as the Joint Ministerial Monitoring Committee, has the authority to call for a full OPEC+ meeting if necessary.
The price of oil has surged to a three-month high, surpassing $85 a barrel for Brent crude this week, as the combination of limited supply and increasing demand outweighs concerns about potential interest rate hikes and persistent inflation that could impact economic growth.
The six OPEC+ sources revealed that the Committee is unlikely to make any changes to the existing policy during the upcoming online meeting. One of the sources cited the rising oil prices as a reason to avoid taking immediate action.
As of the time of this report, there has been no response from OPEC or the Saudi Energy Ministry regarding the matter.
The UAE’s energy minister, speaking on behalf of an OPEC member, stated on July 21 that the current actions taken by OPEC+ were adequate for the moment, and the group was ready to respond if further measures became necessary. The UAE minister is a part of the JMMC, which is chaired by Saudi Energy Minister Prince Abdulaziz bin Salman.
While it appears that no immediate changes are expected, the possibility of a surprise decision cannot be completely ruled out. In July, the Saudi minister hinted that OPEC+ would continue its efforts to surprise the markets.
In the past, there have been instances where several OPEC+ members announced cuts just before a JMMC meeting, which was initially anticipated to have no action taken.
During the last policy meeting in June, OPEC+ agreed on a comprehensive deal to limit supply until 2024, and Saudi Arabia committed to a voluntary production cut for July, which has been extended to include August.
Analysts from National Australia Bank anticipate that Saudi Arabia will announce an extension of their voluntary production cut during the committee meeting on Friday, possibly covering the month of September as well.
