By Udeme Akpan
THE oil market, yesterday, continued to record slow recovery as the Joint Ministerial Monitoring Committee (JMMC) of the Organisation of Petroleum Exporting Countries (OPEC) puts conformity to its output cut at 97 per cent.
The level of compliance was noted at the 21st Meeting of the Joint Ministerial Monitoring Committee (JMMC), which took place via videoconference on Wednesday, August 19, 2020, under the Chairmanship of HRH Prince Abdul Aziz Bin Salman, Saudi Arabia’s Minister of Energy, and Co-Chair HE Alexander Novak, Minister of Energy of the Russian Federation.
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The Committee, which reviewed the monthly report prepared by its Joint Technical Committee (JTC) and developments in the global oil market since its last meeting on July 15, 2020, also considered market prospects for the second half of 2020 and for 2021.
It emphasized the ongoing positive contributions of the Declaration of Cooperation (DoC) in supporting a rebalancing of the global oil market.
Similarly, 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.
According to OPEC, “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% 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 the end of next week, August 28, 2020.
“The Committee emphasized that achieving 100% conformity from all participating countries in the DoC and compensating for the shortfalls in May, June and July 2020 is not only fair but vital for the ongoing rebalancing efforts and to help deliver long-term oil market stability.
“It instructed the 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.”
OPEC also added: “It underscored the fragility of the market and significant uncertainties, particularly associated with oil demand, and called for vigilance by all participating countries.”