The Joint Ministerial Monitoring Committee (JMMC), has observed “encouraging signs of improvement in the oil market as economies around the world open up. While there could be localized or partial lockdowns re-imposed in some places, the recovery signs they say are clear, both in physical and futures markets”.
The Joint Ministerial Monitoring Committee (JMMC) today held a virtual meeting to “review developments in the global oil market since its last meeting, review its monthly report and also considered market prospects for the second half of 2020”.
The meeting, which was held via video conference on the 15th July was under the chairmanship of HRH PrinceAbdul Aziz Bin Salman, Saudi Arabia’s Minister of Energy, and co-Chair by HE Alexander Novak, Minister of Energy of the Russian Federation.
The Committee at the meeting iterated “the importance of the ‘Declaration of Cooperation’ (DoC) in supporting oil market stability”.
The committee, “Reviewed and reaffirmed the commitment of all Participating Countries to achieve full conformity and make up for any deficit under compensation plans presented to the Committee”.
The committee stressed that, “To help deliver long term oil market stability and also the ongoing rebalancing efforts not only is achieving 100 per cent conformity from all participating Countries fair but vital as well”.
According to the report, they welcomed “the significant performance in the overall conformity level for participating OPEC and non-OPEC Countries at 107 per cent in June 2020, an achievement that gain wide recognition in the market when reviewing the crude oil production data for the month of June 2020”.
The committee also appreciated, “the additional voluntary contributions made by Saudi Arabia, the United Arab Emirates and Kuwait in the month of June 2020”.
The Committee noted that, “removing the credit for over-conformity resulted in a conformity level of 95% in June 2020, the highest since the inception of the DoC in January 2017.
It requested “close monitoring and reporting by the JTC and the OPEC Secretariat to the JMMC, the implementation of the required compensation by the underperforming participating countries.”
At the meeting, “underperforming participating countries were requested 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 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 today noted that, “moving to the next phase of the agreement, the extra supply resulting from the scheduled easing of the production adjustment will be consumed as demand recovers”.
The Committee further noted that, “seasonality is more pronounced this year, due to the pandemic. For many DoC participants, there will 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 will be limited”.
Monthly meetings have been endorsed to strengthen monitoring and to help provide clearer understanding of market fundamentals.
