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Opec+ panel unlikely to tweak oil policy at February 1 meeting

REUTERS/Heinz-Peter Bader
Opec’s oil production fell in April, reflecting the impact of earlier output cuts pledged by Opec+ to support the market

An Opec+ panel is likely to endorse the producer group’s current oil output policy when it meets next week, five Opec+ sources have said, as hopes that improved Chinese demand would drive an oil price rally were balanced by economic concerns.

Ministers from Opec and allies led by Russia, known collectively as Opec+, meet virtually on February 1.

The panel, called the joint ministerial monitoring committee (JMMC), can call for a full Opec+ meeting if warranted.

The meeting comes as the price of oil has rallied in 2023 towards $90 a barrel on hopes Chinese demand will recover while the European Union and Group of Seven (G7) are set to broaden a price cap on Russian crude to refined products from February 5.

Five Opec+ sources told Reuters the JMMC would discuss the economic outlook and the scale of Chinese demand, and was unlikely to suggest tweaks to current policy. One said oil’s rebound in 2023 makes any changes unlikely.

“We will certainly discuss China’s economy and inflation,” one of them said. “There are no expectations for this meeting. This will not be an Opec+ meeting, but only a JMMC with no decisions or recommendations.”

The UAE’s energy minister Suhail Al-Mazrouei said on January 16 the market was balanced, echoing earlier remarks from Russian counterpart Alexander Novak. Both ministers sit on the JMMC.

“Opec+ is by now somewhat comfortable that the difficult time of Covid’s impact is behind us and the geopolitical situation and China’s recovery are driving the volatility,” another of the Opec+ sources said.

Opec+ angered the United States and other Western nations in October when it decided to cut output by 2 million barrels per day (bpd) from November through 2023, instead of pumping more to lower fuel prices and help the global economy as the US advised.

At their last meeting in December, the group left policy unchanged and their next full meeting is not scheduled until June.