OPEC+ JMMC Oct 4 Preview: No Change in Policy Expected

OCT 4 JMMC PREVIEW - OPEC+ ministers are set to meet Wednesday at the Joint Ministerial Monitoring Committee (JMMC) but no changes in policy are expected with the group seemingly intent on tightening the market into Q4.

• OPEC+ cuts as well as extra voluntary contributions – mainly from Saudi and Russia – have driven Brent well into the $90s and drawn plenty of speculation about $100/bbl Brent before the end of the year if cuts are sustained.
• Global economic fears have pulled Brent back into the low $90s this week which is less likely to spur any OPEC+ drive to change policy in the short term and aligns more with OPEC minister concerns about the global economy.
• Speaking in Calgary last month, Saudi Energy Minister Prince Abdulaziz bin Salman said the "jury is still out" when it comes to the outlook for global demand.
• He added "It's always better to go by my motto, which is: I believe it when I see it. When reality comes around as it's been forecast; hallelujah, we can produce more."
• Saudi slashed its oil output by 1mn bpd in July, deepening earlier cutbacks made in conjunction with OPEC+ and taking production to a two-year low of about 9mn bpd. It is currently committed to keep that limit in place until the end of the year. Russia has pledged a more modest export reduction of 300,000 bpd, winding back from prior levels of 500,000 bpd. Note that Saudi is committed to a production cut while Russia is aimed at an export cut.
• In terms of any signs of forward policy direction for the group, OPEC+ looks set to stay the course. UAE’s Energy Minister Suhail al Mazrouei said on Monday that OPEC+ has “the right policy.”
• Meanwhile, four OPEC+ sources quoted by Reuters said there is no change expected tomorrow. "Nothing has been discussed. It will probably be a normal meeting with emphasis on the OPEC+ agreement," one of the sources said.
• RBC said in its latest client note “When OPEC’s JMMC meets this Wednesday, we do not anticipate any major shift in production policy despite a price increase of nearly 9% since the August monitoring meeting.”
• Chief OPEC Correspondent Amena Bakr said on X “No recommendations to change the current opec plus policy is expected at the upcoming JMMC on the 4th of October. This means the groups 2 million bpd cut will remain in place until the end of 2024 as per the current agreement.”
• Analysts at Platts “do not expect OPEC+ to raise output unless prices are above $100/b for some time.”
• Despite a general feeling of a rollover in policy, a Saudi surprise should never be dismissed although any change in policy would likely to a tapering of its 1mn bpd production cuts.
• National Australia Bank analysts leant some sway in the direction of increased production saying there is "increasing probability the voluntary supply cuts by Aramco are reduced."
• Despite claims of a lack of clarity in the global economy, OPEC's latest analysis sees global oil demand outstripping supply by more than 3 mn bpd in the fourth quarter of 2023 – an outlook supportive of higher prices.
• The recent indefinite Russian oil product ban also throws uncertainty into the mix creating an overall picture of market tightness until flows resume onto global markets again.