OPEC+ held the 19th Joint Ministerial Monitoring Committee (JMMC) via videoconference at the end of last week and revealed that in May the group saw a high-level of compliance.
The JMMC reiterated the critical role that the ‘Declaration of Cooperation’ (DoC) continues to play in supporting oil market stability and economic recovery, in the face of the COVID- 19 pandemic shock and the subsequent severe global economic downturn.
OPEC revealed that the overall conformity in May was 87 per cent, which was higher than some analysts had predicted but the meeting did not recommend continuing the high-level 9.7 million bpd cuts in August.
Rystad Energy’s Head of Oil Markets Bjornar Tonhaugen: “An 87 per cent compliance on the OPEC+ agreed production cuts is a good percentage. In fact a better percentage than most market participants really expected when the curtailments were first announced. The high-level compliance is a song to the traders’ ears who have been worried that words may have been too good to be true.
In a statement, OPEC reiterated the critical importance that all participating countries achieve their 100 per cent level, and make up for any monthly shortfalls in the months of July, August and September.
OPEC+ made it clear they are serious about getting full conformity and pointed the finger to specific countries, which either already have a plan to meet their commitments or are required to present one soon.
“On the naughty corner, Iraq and Kazakhstan are now officially pressed to act and live up to their word. They both committed to compensate for the lack of compliance and their higher production so far and that could be an extra piece of bullish news for the market, which may see the two nations removing some supply,” added Tonhaugen.
OPEC said that Iraq and Kazakhstan had already submitted their compensation schedules, while OPEC agreed to give other underperforming participants until Monday 22 June to send in plans.
OPEC also noted the additional voluntary contributions totalling 1.2 million bpd made by Saudi Arabia, the UAE, Kuwait and Oman in the month of June 2020.
The next JMMC is scheduled for mid-July.