OPEC+ unlikely change policy on output at Oct. 2 panel

Five sources within the group said that despite recent drops in oil prices an OPEC+ panel will not recommend any changes this week to its current agreement to reduce production or to begin unwinding cuts made since December.

On Wednesday, 1200 GMT, top ministers of the Organization of the Petroleum Exporting Countries (OPEC+) and its allies, led by Russia, will meet online to form a Joint Ministerial Monitoring Committee (JMMC).

One of the sources, who declined to identify themselves, said that "despite the fact that the oil market is a little complicated, I don't expect any new decisions or changes to the OPEC+ Agreement at Wednesday's Meeting."

Brent crude oil prices fell in 2024. Last month, Brent crude dropped below $70 a barrel for the first since 2021. This was due to concerns about global supply and demand outside of OPEC+. Brent traded near $71 on Monday.

OPEC+ has agreed to a series steps since the end of 2022 that will reduce its output by a total amount of 5,86 million barrels per daily (bpd), which is about 5.7%.

In its latest agreement, OPEC+ is required to increase output by 180,000 bpd during December as part of a plan that will gradually undo the most recent voluntary cuts in 2025. After prices fell, the increase was postponed from October.

At the meeting, and in the coming weeks, attention will be focused on countries that have committed to reducing production. Iraq and Kazakhstan in particular are expected to do so. They promised compensation cuts of 123,000 Bpd for September and even more in subsequent months.

A source from OPEC+ told us last week that once it is clear that compensation cuts will be made in September, the increase for December will go ahead because the net addition to supply on the market will only be minimal.

Analysts said that if Saudi Arabia and other countries do not comply with the cuts, they may accelerate their unwinding in December.

Helima Croft, of RBC Capital, said in a recent report that "if they do not comply we can see a faster sunsetting of voluntary cuts."

The JMMC is a group of oil ministers that meets twice a month and has the power to make policy changes. (Reporting and editing by Emelia Sithole Matarise, Maha El-Dahan, Ahmad Ghaddar, and Olesya Astakhova; Reporting by Alex Lawler)

(source: Reuters)