The OPEC+ group will not hold a full ministerial meeting on Wednesday as planned, delegates at the Joint Ministerial Monitoring Committee (JMMC) agreed at their meeting on Tuesday, signaling confidence in the current plans to ease the production cuts as of May despite surging COVID cases in major oil importer India.
Oil prices rose on Tuesday morning on the news coming out of Vienna that shows OPEC+ believes the market will be able to accommodate the higher oil supply as of May 1, despite the worsening of the COVID situation in the world’s third-largest oil importer India.
As of 9:52 a.m. EDT on Tuesday, WTI Crude was up 0.94 percent at $62.51 and Brent Crude was trading up 0.69 percent at $66.12.
On Tuesday, all delegations at the meeting of the JMMC, which was moved ahead one day before the original schedule, agreed that there would be no need for the ministers of the pact to meet on Wednesday, Amena Bakr, Deputy Bureau Chief and Chief Opec Correspondent at Energy Intelligence, reported.
At the previous ministerial meeting in early April, OPEC+ decided to gradually return over 1 million barrels per day (bpd) on the market between May and July. Saudi Arabia will also start reversing its extra unilateral cut of 1 million bpd, starting by raising production by 250,000 bpd in May. Related: Oil on Guard over Yemen as Saudi, Iran Meet in Secret
The JMMC recommended no changes in the planned OPEC+ production policy for May, although reports emerged on Monday that the Joint Technical Committee (JTC) was concerned about the growing case numbers in India, Japan, and Brazil.
At the JMMC meeting on Tuesday, OPEC Secretary General Mohammad Barkindo said that “the oil market continues to reap the benefits of the DoC’s support for sustainable oil market stability and providing a platform the global economic recovery.”
The secretary general “highlighted the positive trajectory of the global economy, coupled with stimulus measures, progress on vaccinations and the summer travel season, as driving forces for the improving oil demand outlook in the second half the year,” OPEC said.
After forgoing this month’s meeting, the ministers from the OPEC+ group are set to hold their next meeting in early June.
By Tsvetana Paraskova for Oilprice.com
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Against this optimistic outlook, OPEC+ felt no need to change its plans of raising its production by 1.0 million barrels a day (mbd) between May and July.
I for one continue to project that the Global oil demand will return to pre-pandemic level of 101 mbd by the middle of this year with Brent crude hitting $70-$80 a barrel in the third quarter of 2021 and averaging $65 for the year.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London