The Joint Ministerial Monitoring Committee, JMMC, meeting of the OPEC+ that took place in the form of a virtual conference on Wednesday, finally managed to provide the markets with much needed sense of direction.
The oil price shot up, having been in decline for days. Brent oil hit above $58, the highest so far during the turbulent period.
The meeting was unusually short, yet managed to reach an agreement with most members seeing eye to eye on the main issue: maintaining the crude price while not flooding the market with extra crude flow.
The members praised Saudi Arabia for extra output cut that came into effect on February 1 – one million bpd – that could last two months; they noted the move with gratitude.
The compliance by the members with, what OPEC+ called, the original production adjustments, according to the communique issued after the meeting, was excellent.
The cumulative production cut, according to the latest meeting, was a staggering 2.1 billion barrels. They viewed it as an inevitable part of a rebalancing process with the ultimate aim of stabilizing the market.
In response to the current market conditions, especially on the supply side, the members agreed to restore some of the output held by the member states in due course; the figure was not released, letting it evolve in proportion to the demand.
In short, the members congratulated themselves on their collective achievement.
The committee did not turn a blind eye on the uncertainties that grip the economies; they admitted that was the case and pin their hopes, as everyone else does, on vaccine rollout in curbing the pandemic.
The committee also want the members of the OPEC+ to remain vigilant and flexible in order to face unexpected challenges that may stem from current conditions; one of them, potentially, could be shale-oil staging a triumphant come-back.
The next meeting of the JMMC of the OPEC+ will be held in a month’s time on March, 3 this year, in which the members will review the impact of their output-cut strategy on the markets – and their struggling economies too.