The Joint Technical Committee (JTC) of the OPEC+ group has said that it did not discuss suspending Russia’s quota in the oil production deal at the meeting yesterday, ahead today’s ministerial meeting.
OPEC correspondent and bureau chief at energy intelligence, Amena Bakr, said last night that the technical panel did not talk about what oil production policy would look like going forward, either.
OPEC said the Joint Technical Committee (JTC) held its regular meeting to review oil market developments ahead of Thursday’s meeting of the Joint Ministerial Monitoring Committee (JMMC) that would be followed by the OPEC+ ministerial meeting, without providing details.
Observers said the market should expect another dull OPEC+ meeting this week, like most of the meetings of the past few months, until a report on Tuesday suggested that OPEC+ could consider suspending Russia’s quota in the deal.
Some OPEC members are mulling over the possibility of suspending Russia from the OPEC+ deal that limits the amount of crude oil that each member can produce, the Wall Street Journal reported on Tuesday, citing OPEC delegates.
The thinking is that suspending Russia’s role in the group could allow other members to increase oil production at a quicker pace, although there are only a few OPEC members believed to have the capacity to ramp up production as quickly as the current deal allows.
Following the report, oil prices erased gains late on Tuesday as market participants reacted to the possibility that members with spare capacity could tap into that capacity and boost production.
“However in reality, given that most members have failed to hit their output targets consistently for several months, it will likely be a struggle for the group as a whole to increase output more aggressively,” ING strategists Warren Patterson and Wenyu Yao was quoted yesterday.
Fitch Ratings said yesterday that Russia, for its part, could see about 2 million bpd – 3 million bpd of its oil exports—or about a quarter of the country’s oil production—disappear from the global market by end-2022.
“We believe that redirecting of all Russian oil and products volumes may not be possible due to infrastructural limitations, buyers’ self-restrictions and logistical complications, such as potential restrictions on providing insurance for cargos carrying Russian oil,” Fitch stated.
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