The Organization of Petroleum Exporting Countries, OPEC, is muzzling up and rallying members support to take additional measures aimed at stabilizing the oil market.
The OPEC had signaled it will stay the course as group leader Saudi Arabia extends a production cut aimed at shoring up global oil markets.
A monitoring committee comprising the kingdom and other key OPEC nations recommended no changes to the coalition’s supply policy at an online meeting on Friday, according to a delegate, who asked not to be named because the information was private.
Riyadh announced on Thursday that it will extend a unilateral cutback of 1 Million Barrels a day into September and potentially deepen the reduction after that to support a fragile market.
Crude prices are trading near a three-month high above $85 a barrel in London yet fears over China’s economic rebound cloud the demand outlook.
The committee “will continue to closely assess market conditions” and noted that OPEC members are willing “to address market developments and stand ready to take additional measures at any time,” according to a statement on the organisation’s website.
Major consuming nations have criticised the Saudis for constricting output when oil markets are already on track to tighten significantly, warning that a renewed inflationary spike would inflict more pain on consumers.
The kingdom is getting some assistance from fellow OPEC member Russia, which is finally delivering on pledges to curb its supplies. Moscow announced on Thursday it will also continue export restraints into September, but taper them slightly to 300,000 bpd.
The current effort is largely confined to the two OPEC leaders: several other nations among the Organization of Petroleum Exporting Countries and its partners are pumping below their assigned quotas and unable to cut further, plagued by inadequate investment and political instability.
Defending the oil market has come at a cost for the Saudis, requiring them to slash output to a two-year low near 9 MMbpd.
The kingdom suffered the sharpest downgrade to economic growth projections by the International Monetary Fund, which sees the country expanding by just 1.9 per cent this year, a fraction of its performance in 2022.
The Joint Ministerial Monitoring Committee will convene again on October 4, according to the statement, while the full 23-nation OPEC alliance is due to meet in late November.