The collective gaze of the global oil and gas industry is riveted on Muscat today as the Sultanate hosts — for the first time — a Joint Ministerial Monitoring Committee (JMMC) meeting amid reports of unprecedented highs in global output cut compliance that has helped underpin a strong rally in international oil prices. Helping ease concerns ahead of the meeting are comments from key Opec members affirming that the contentious issue of an exit strategy from the key December 2016 pact between Opec and non-Opec producers, credited with stabilising global oil markets, is not on the table for discussion. Non-Opec member Russia, which also signed up to the landmark ‘Declaration of Cooperation’ pact, had earlier alluded to a possible discussion on mechanisms to exit the agreement at today’s meeting in Muscat.
All 24 signatories to the pact, whose validity has been extended to 2018-end, have pledged to adhere to ‘voluntary production adjustments’ regardless of the impact on oil prices, that crossed $70 per barrel last week — for the first time since the oil price collapse of late-2014.
Ahead of today’s keenly watched JMMC meeting in Muscat, Opec officials have revealed that compliance with output cuts reached 118 per cent last week as drawdowns from US crude inventories, as well as storage hubs elsewhere around the world, continue to deplete stockpiles.
That figure was touted just after Kuwait’s Oil Minister Bakheet al Rashidi revealed that compliance among all producers that are party to the Declaration for Cooperation was around 125 per cent in December. This compares with a high of 122 per cent in November.
Although not an Opec member, Oman offered to host today’s 7th meeting of the Joint Ministerial Monitoring Committee, which was established in the wake of the Declaration of Cooperation made at the joint Opec-Non-Opec producers meeting held on December 10, 2016.
At that meeting, a total of 24 producers agreed to accelerate the stabilisation of global oil markets by cutting 1.8 million barrels per day (bpd). The pact, initially valid for six months, was extended via a series of extensions, to include the whole of 2018 as well.
Non-Opec members Oman and Russia sit on the JMMC, along with Opec members Venezuela, Kuwait, Algeria and Saudi Arabia. Opec Secretary- General Mohammad Sanusi Barkindo will be in attendance as well.