The Joint Ministerial Monitoring Committee, which oversees the OPEC+ crude production agreement, is likely to recommend continuing with the current policy at a meeting scheduled for Feb. 3, as early 2025 price gains have waned.
The group faces the challenge of how to respond to US President Donald Trump’s flurry of pro-oil executive orders and calls for OPEC to increase output. This has raised the likelihood of price volatility and market conditions that are unfavorable to OPEC+ bringing barrels back to market.
OPEC has yet to show any signs that it will amend output plans or abandon its alliance with Russia and its other non-OPEC allies. If it were to reverse current policy and start a battle for market share this could seriously affect oil prices and undermine Russia’s ability to finance its war in Ukraine.
The JMMC is co-chaired by Saudi Arabia and Russia.
Oil prices have moved closer to levels seen at the end of 2024 in recent days. Platts assessed Dated Brent at $77.475/b on Jan. 30, compared to $74.645/b on Dec. 31. Prices hit $83/b in mid-January after the outgoing Biden administration introduced harsher sanctions on the biggest non-OPEC producer in the group, Russia.
“No change expected,” one delegate said ahead of the JMMC.
OPEC and its allies are currently planning to increase crude output quotas from April.
OPEC+ is holding some 5.8 million b/d of crude off the market. Eight producers, including Saudi Arabia, Russia, Iraq, and the UAE, are implementing voluntary cuts totaling 2.2 million b/d. Easing these cuts has already been delayed three times.
The group can hold extraordinary meetings or change policy at any point if market conditions require.
OPEC+ faces a dilemma in how to respond to Trump’s policies.
“How pressure from Trump impacts OPEC+ decisions and timing—along with the need for unity within the group—will influence the lag time between Trump’s calls for more output and when more OPEC+ output actually appears,” Jim Burkhard, vice president of research for S&P Global Commodity Insights said.
On Jan. 29 Kazakhstan hinted at OPEC+ coordinating a response to Trump policies.
Another delegate said that US policy is not on the agenda for the Feb. 3 meeting, however.
Growing rival production, including in the US, has been a major issue for OPEC+ in recent years and is likely to continue to affect its strategy in 2025.
OPEC forecasts non-OPEC+ production to grow by 1.1 million b/d year over year in 2025 and by the same level in 2026.
Analysts are skeptical at how quickly Trump’s policies could lead to meaningful production growth in the near term, with oil prices and Wall Street largely determining US oil production volumes.
While Trump is pushing for lower crude prices, he is also pursuing trade wars with multiple countries, including key oil market players including Mexico, Canada and China, which could hit oil supply and demand.
Compliance challenge
Within OPEC+, producers with quotas will continue to be under close scrutiny in 2025, particularly if prices remain below $80/b.
The group improved compliance in December, pumping 23,000 b/d above target, down from overproduction of 91,000 b/d in November, according to the latest Platts OPEC+ survey by Commodity Insights.
In December serial overproducers Iraq and Kazakhstan both cut output.
Iraqi production is likely to fall further in January after a fire triggered by a technical fault at Iraq’s Rumaila oilfield hit output. As of Jan. 29 production was down 300,000 b/d on pre-outage levels, a senior official at state-run SOMO said.
Kazakhstan is likely to struggle to meet its target however, after expansion of the major Tengiz field was launched, which is set to boost the project’s crude output capacity by 260,000 b/d.
Kazakhstan is aiming to boost its crude and condensate output to around 1.93 million b/d in 2025, up from 1.76 million b/d in 2024, according to previously released ministry estimates. It plans to increase output to around 2 million b/d from 2026.
Whether these producers can firm up compliance could play a key role in OPEC+ output, policy, and unity over the coming months.
Source: Platts