The Joint Ministerial Monitoring Committee (JMMC) of OPEC+ meets today after it was scheduled for Wednesday, amid market concerns about the continuing high number of Coronavirus infections in India, which is the third largest consumer of oil in the world, and the impact of this on global fuel demand, and with the end of the force majeure that stopped Libyan exports, In addition to the start of the implementation of the OPEC+ production increase next month, this constituted strong pressure on oil prices, to decline significantly recently before recovering after the technical committee confirmed the strong recovery of global oil demand this year.
OPEC and its allies, also known as OPEC+ had agreed at the beginning of April to gradually increase production over the next three months by 350K barrels in May and June and 400K barrels in July, this is in addition to the abandonment of the Kingdom of Saudi Arabia for the voluntary reduction of one million barrels by July.
It is likely that the situation in India will be discussed during the today meeting, and a full ministerial meeting is scheduled to take place following proposals to reduce the classification of this meeting and limit it to discussions within the Joint Ministerial Monitoring Committee only, but it is not expected that a change will occur in the group’s policy to reduce production cuts as of from May 1.
Oil prices are still suffering amid market concern about the sudden rise in cases of the Coronavirus in India, where the number of daily cases reached a record of about 350K, and while the government did not impose a national lockdown, we are instead witnessing regional restrictions, except that the prices received support from technical committee confirmation of demand recovery.
Some refineries in India are responding to weak potential fuel demand by reducing operating rates, and they may be reduced further during the month of May, if conditions in India are not brought under control anytime soon, and it will be a matter of time before many refineries reduce operating rates.
Another matter that will be taken into consideration by major oil producers and must be dealt with is following up on the possible results of the Iranian nuclear deal talks, and the subsequent lifting of sanctions on Iranian oil, and thus an additional increase in supply in the market, but it may be a source of less concern the longer it lasts as Iran has already increased supply in recent months.