The Joint Ministerial Monitoring Committee (JMMC) of the Organisation of Petroleum Exporting Countries (OPEC) and its non-OPEC allies, jointly called OPEC+, yesterday, disclosed that conformity to the production cut deal by participating countries stood at 107 per cent in the month of June 2020.
In a statement issued at the end of its 20th meeting, under the Declaration of Cooperation (DoC), the committee commended Saudi Arabia, the United Arab Emirates and Kuwait, for their additional voluntary contributions made in the month of June.
The Committee noted that removing the credit for over-conformity results in a conformity level of 95 per cent in June 2020, the highest since the inception of the DoC in January 2017.
It further requested the Joint Technical Committee (JTC) and the OPEC Secretariat to closely monitor and report to the JMMC the implementation of the required compensation by the underperforming participating countries.
The committee also urged underperforming participating countries to submit their plan for implementation of the required compensation for the month June 2020 to the OPEC Secretariat by the end of July 2020. The Committee also welcomed the participation of Angola, Gabon, South Sudan and Congo, and noted that they had reiterated their commitment to the DoC production adjustments and compensation plans.
The Committee reiterated the importance of the ‘Declaration of Cooperation’ (DoC) in supporting oil market stability, while it reiterated the historic decision taken by all participating countries in the DoC.
The Committee reviewed and reaffirmed the commitment of all participating countries to achieve full conformity and make up for any shortfall under compensation plans presented to the Committee.
The Committee further stressed that achieving 100 per cent conformity from all participating countries was not only fair, but vital for the ongoing rebalancing efforts and to help deliver long term oil market stability.
The OPEC+ committee observed that there were encouraging signs of improvement as economies around the world open up, adding that while there could be localized or partial lockdowns re-imposed in some places, the recovery signs were clear, both in physical and futures markets.
It noted that, moving to the next phase of the agreement, the extra supply resulting from the scheduled easing of the production adjustment would be consumed as demand recovers.
The Committee also noted that seasonality is more pronounced this year, due to the pandemic, noting that for many DoC participants, there would be an increase in demand for utilities, as well as changes in travel patterns, boosting domestic demand for gasoline and diesel and as a result the impact on DoC participating countries’ exports would be limited.
In addition, the committee maintained that the compensation schedule that had been agreed by participating countries would mean that the effective level of adjustments would be deeper.