ST. PETERSBURG: The Joint Ministerial Monitoring Committee (JMMC) responsible for supervising the global cuts agreement between 24 nations from the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers, met in St. Petersburg on July 24.
The committee is chaired by Kuwait’s oil minister and includes ministers from Russia, Oman, Algeria and Venezuela. Saudi Arabia’s Energy Minister Khalid Al-Falih attended the meeting in his capacity as the president of OPEC’s ministerial conference this year.
Below is a chronology of the meeting for the period July 22 to July 24:
July 21
Members of the Joint Technical Committee (JTC) arrived in St. Petersburg to attend the meeting of the committee scheduled for July 22. The JTC’s task is to monitor the market and the level of compliance of the participating members in the cuts agreement. It is made up of representatives from the same five countries in the JMMC. OPEC Secretary-General Mohammed Barkindo arrived on July 21 to attend the JTC and the JMMC. The JTC meets monthly while the JMMC meets bimonthly. This month’s JTC meeting was important due to the attendance of representatives from Libya and Nigeria, the two countries that are exempted from the cuts deal. Rising output from Libya and Nigeria was one of the factors that put pressure on oil prices.
July 22
The JTC started its meeting early in the morning. According to an OPEC statement, the JTC said in its report after the meeting that it expects oil demand to increase at a significant rate of 2 million barrels per day (bpd) in the second half of this year compared to first half. This level would sustain further falls in global oil stockpiles. JTC also found that OPEC and non-OPEC members achieved a conformity level with pledged cuts of 98 percent in June. Due to the cuts made by producers, commercial oil stocks in industrial countries fell by 90 million barrels between January and June and they stand now at 250 million barrels above their five-year average. Libyan and Nigerian representatives told the JTC that they would not be able to participate soon in the agreement known as the “Declaration of Cooperation” until they are able to produce at sustainable levels. Libya targets a level of 1.25 million bpd, according to Barkindo, while Nigeria targets 1.8 million bpd, according to OPEC’s statement. Reuters reported late on July 22 that the JMMC may consider recommending conditional caps on output from these two countries. Bloomberg issued a story the following day saying that JMMC’s talks will rule out any caps on them.
July 24
The JMMC started the meeting with statements to the press. The Saudi energy minister made it clear from the beginning that the meeting will not discuss making any further cuts other than what was agreed in the deal. Oil prices fell briefly after this statement. He also stressed that monitoring exports should be included in the deal in addition to the countries’ production levels. After the meeting, the Saudi minister sent strong messages that it will cut output and exports deeply in August to “lead by example.” The JMMC concluded meeting with two main messages: The cuts deal could be extended beyond its expiry in March if needed, and that the JMMC can call for an emergency meeting at any time if oil prices go down greatly.