JMMC reports highest ever conformity level

The Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) stated that based on the Report of the Joint OPEC-Non-OPEC Technical Committee (JTC) for the month of August 2017, OPEC and participating Non-OPEC producing countries recorded the highest conformity ever with their voluntary adjustments in production, achieving a level of 116%.

The JMMC was established following OPEC’s 171^st Ministerial Conference Decision of 30 November 2016, and the subsequent Declaration of Cooperation made at the joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting held on 10 December 2016 at which 11 (now 10) non-OPEC oil producing countries cooperated with the 13 (now 14) OPEC Member Countries in a concerted effort to accelerate the stabilization of the global oil market through voluntary adjustments in total production of around 1.8 million barrels per day. The resulting Declaration, which came into effect on 1 January 2017, was for six months. The second joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting, held on 25 May 2017, decided to extend the voluntary production adjustments for another nine months commencing 1 July 2017.

At its 5^th meeting, which took place today in Vienna, Austria, the JMMC welcomed the participation of Iraq, Libya and Nigeria, and the reaffirmation of their commitment to work closely with other participating producing countries to ensure the success of the Declaration of Cooperation.

The President of the OPEC Conference, HE Khalid A. Al-Falih, Minister of Energy, Industry and Mineral Resources of the Kingdom of Saudi Arabia, participated in the meeting by telephone, expressed his solidarity with the JMMC, reiterated the commitment of Saudi Arabia to the success of the Declaration of Cooperation and cautioned against complacency. Moreover, the President of the Conference reaffirmed the necessity of additional work to be undertaken by under-performing participating countries to bring their conformity levels to 100%.  He then thanked Libya and Nigeria for their positive engagement and their ongoing coordination with the participating countries in the Declaration of Cooperation.

In August 2017, the OPEC and participating non-OPEC producing countries achieved an excellent conformity level of 116%, the highest level since the start of the Declaration of Cooperation. This again underscores the resolute commitment of participating producing countries to cooperate towards the rebalancing of the market. The JMMC expressed satisfaction with the overall results and steady progress made towards full conformity with the production adjustments, and encouraged all participating countries to continue on the path towards better conformity, for the benefit of producers and consumers alike.

The JMMC noted that while some participating producing countries have consistently performed beyond their voluntary production adjustments, others are yet to achieve 100% conformity. Furthermore, the JMMC underscored the critical importance that all participating producing countries reach or exceed the 100% conformity rate, and recommended that the JTC continue building on the progress made at the JTC Extraordinary Session held in Abu Dhabi on 8 August, to support each participating country in their efforts towards achieving full conformity with the Declaration of Cooperation.

The JMMC took note of recent market developments and expressed confidence that the oil market is moving in the right direction towards the objectives of the Declaration of Cooperation. Recent data confirmed that global oil demand growth in 2017 is now better than expected, while for 2018, world oil demand is anticipated to be robust.

Commercial oil stocks in the OECD fell further in August and the difference to the latest five-year average has been reduced by 168 million barrels since the beginning of this year, however, there remains another 170 million barrels of stock overhang to be depleted. Supported by the improving forward structure in the futures market, floating storage has also been on a declining trend since June.

The JMMC will continue to monitor other factors in the oil market and their influence on the ongoing market rebalancing process. All options are left open to ensure that every effort is made to rebalance the market for the benefit of all.

The next JMMC Meeting is scheduled to be held in Vienna, on 29 November 2017.