Bloomberg was told Tuesday by OPEC+ delegates that the Joint Ministerial Monitoring Committee (OPEC+) is likely to recommend maintaining current levels of oil production next week amid significant uncertainty about supply and demand in coming weeks.
The JMMC will meet online on February 1st to discuss the current situation in the oil market, and possibly recommend actions for OPEC+ to take.
Despite the uncertainty about Chinese demand and Russian supplies in February and March, OPEC+ is expected to maintain current production levels. OPEC+ has reduced the target output by 2,000,000 barrels per daily (bpd), since November. However, the actual reduction was around 1,000,000 bpd.
According to the MOMR, December’s average December production increased by 91,000 barrels per day to 28.971million bpd. Nearly all the gains were from Nigeria. Despite this, December’s OPEC-10 production – the members bound to the OPEC+ pact — was still significantly below the production quota. The group produced less than 800,000. barrels per day.
OPEC+ and other market participants will continue to look to China, Russia, and other countries for immediate clues about global demand and supply.
The market and analysts expect Chinese oil demand will rebound following the reopening by the largest crude oil importer in the world after almost three years of Covid-related lockdowns.
Saudi oil giant Aramco anticipates that the Chinese reopening will lead to a pick up in jet fuel demand, according to Amin Nasser (CEO of the world’s largest oil company), in an interview with Bloomberg last week.
The supply side of the equation, the EU embargo that will be in place on February 5th on seaborne imports from Russia of refined petroleum products could result in a reduction in Russian crude oil production.
Analysts believe that Brent oil prices have stabilized in the upper $80s recently, which could indicate that OPEC+ won’t rush to alter its production policy ahead of the EU embargo against Russian diesel.