OPEC+ sticks to output policy of 5.86 million barrel pullback per day, hints at unwinding cuts from October

The Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+ kept the oil output policy unchanged at their meeting conducted on Thursday, but hinted at plans to start unwinding one layer of output cuts from October, and repeated that the hike could be paused or reversed if needed.

Several ministers from the OPEC+ cartel held an online joint ministerial monitoring committee meeting (JMMC) on August 1. OPEC+ is currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7 per cent of global demand, in a series of steps agreed since 2022 to bolster the market amid uncertainty over global demand and rising supply outside the group.

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OPEC+ August Policy: What has the oil cartel decided?

OPEC+ said in a statement that the members making the most recent layer of cuts - a 2.2 million bpd voluntary cut until September - reiterated that its gradual phase-out could be paused or reversed, depending upon the market conditions. Crude oil prices have fallen from a 2024 high above $92 a barrel in April to below $81, pressured by concern about the strength of demand but finding support this week from increasing tensions in the Middle East.

Russian Deputy Prime Minister Alexander Novak said on Thursday the current level of oil prices was comfortable for Russia, its budget, and other participants in the market. Supply and demand remained in balance, he added. "Starting from the fourth quarter, if the balance of supply and demand is positive, a partial increase in production is possible," said Novak.

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OPEC+ agreed at its last meeting in June to phase out the 2.2 million bpd cut over the course of a year from October 2024 until September 2025. It also agreed then to extend earlier cuts of 3.66 million bpd until end-2025.

Soon after that development, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said OPEC+ could pause or reverse the production hikes if it decided the market is not strong enough. The meeting also noted assurances from Iraq, Kazakhstan and Russia to achieve full conformity with the pledged output cuts. 

Those countries had earlier delivered plans to compensate for the past overproduction. The JMMC, which groups the oil ministers of Saudi Arabia, Russia and other leading producers, usually meets every two months and can make recommendations to the wider OPEC+ group. The JMMC will hold its next meeting on October 2.

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OPEC oil output rises in July on Saudi rebound

OPEC oil output rose in July as a rebound in Saudi Arabian supply and small increases elsewhere offset the impact of ongoing voluntary supply cuts by other members and the wider OPEC+ alliance, according to news agency Reuters.

OPEC pumped 26.70 million barrels per day (bpd) last month, up 100,000 bpd from June, according to the survey based on shipping data and information from industry sources. The increase comes despite OPEC+ keeping in place most of its output cuts until the end of 2025 to bolster the market in the face of tepid demand growth, high interest rates and rising US production.