Achieving 100 per cent conformity from all participating countries is vital for the ongoing rebalancing efforts and delivering long-term oil market stability.
This was the consensus at the 21st Meeting of the Opec and Non-Opec's Joint Ministerial Monitoring Committee (JMMC) that took place via videoconference on August 19, 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, a report said.
The meeting instructed the Joint Technical Committee (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 reviewed the monthly report prepared by JTC and developments in the global oil market since its last meeting on July 15, 2020. The Committee also considered market prospects for the second half of 2020 and for 2021.
On the sidelines, Prince Mohammed had a conversation with Mustafa Al Kadhimi, the Prime Minister of Iraq, on the global oil developments.
During the conversation, they discussed efforts being undertaken to stabilise and rebalance global oil markets.
In this regard, they stressed the importance of compliance, by all participants, to the Opec+ agreement and the concurred upon compensation mechanism. They also discussed bilateral relations between the two countries and opportunities for their further development.
Meanwhile, the Opec+ 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 April 12, 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 June 6, 2020.
The outcomes of the June Meetings extended the first phase of the production adjustments until July 31, 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 August 28, 2020.
The next meetings of the JTC and the JMMC are scheduled for September 16 and 17, 2020, respectively.
