In a recent meeting, the OPEC+ ministerial panel decided to maintain the current oil output policy without making any changes. This decision comes after Saudi Arabia’s announcement to extend its voluntary production cut into September, which contributed to a further rally in oil prices.
The Joint Ministerial Monitoring Committee, which convened for the meeting, has the authority to call for a full gathering of OPEC and its allies, including Russia (OPEC+), if necessary.
Oil prices experienced a significant increase of more than 14% in July compared to June, marking the largest monthly percentage rise since January of the previous year. The rise in prices was attributed to tighter supply and increasing demand, which outweighed concerns about potential negative effects on economic growth from interest rate hikes and persistent inflation.
The committee stated in an OPEC-issued statement after the online meeting that they will closely monitor market conditions. They also encouraged all member countries to fully comply with their output cut pledges.
Saudi Arabia had previously announced its decision to extend a voluntary oil output cut of one million barrels per day (bpd) into September and left open the possibility of further extensions or deeper cuts. As a result, oil prices on Friday were trading at nearly $86 per barrel, close to their highest level since mid-April.
In addition to Saudi Arabia, Russia also confirmed its plan to reduce oil exports by 300,000 bpd in September, following the Saudi announcement.
Algeria, another OPEC member, had implemented an additional voluntary cut of 20,000 bpd for August but has not yet decided whether to extend it into September, according to a Reuters source familiar with the matter.
During their last policy meeting in June, OPEC+ agreed to a comprehensive deal to limit oil supply until 2024, and Saudi Arabia committed to a voluntary production cut for July, which was then extended to include August.
In total, the OPEC+ output cuts, excluding the extra voluntary reductions from Saudi Arabia, Russia, and Algeria, amount to 3.66 million bpd, roughly 3.6% of global demand.