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OPEC+, led by Saudi Arabia and Russia, did not make any specific proposals at an online meeting of the Joint Ministerial Monitoring Committee (JMMC) on Thursday, August 1, perhaps indicating that they will maintain their plan to gradually withdraw voluntary additional production cuts starting next quarter. The JMMC will meet again on October 2.

Russian Deputy Prime Minister Novak said that the current crude oil price is comfortable for Russia. Russia previously estimated that the oil price will fluctuate in the range of 80-85 US dollars per barrel. It is important to maintain the balance between supply and demand, which is the basis for stabilizing oil prices.

Algerian Energy and Mines Minister Mohamed Arkab said in a statement after the JMMC meeting that OPEC+ countries decided to intensify consultations, exchange views regularly and pay special attention to any developments that could have an impact on the development of market fundamentals.

Led by Saudi Arabia, OPEC+ has implemented a series of production cuts since late 2022 to help balance the impact of large crude oil supplies from the United States and other regions on oil prices. Despite this, OPEC+'s production cuts have failed to drive a significant increase in oil prices. The inability of some OPEC+ producers to cut production as planned has brought further resistance to the crude oil market.

OPEC+ has relaxed its production cut policy. At the June meeting, it agreed to extend its production cut policy until 2025, but gradually canceled the voluntary additional production cuts from the end of September. This means that crude oil production will increase by about 540,000 barrels per day in the fourth quarter of this year.

The above decision of OPEC+ caused oil prices to fall in June. Saudi Arabia and other countries subsequently urgently clarified that the market will eventually realize the correctness of the latest decision. In addition, the organization reserves the option to suspend or reverse production changes if necessary.

At this meeting, OPEC+ did not modify its June decision, but reiterated in a statement issued after the meeting that the gradual cancellation of voluntary production cuts may be suspended or reversed depending on market conditions.

Brent crude prices have been under pressure due to ample crude oil supplies in the United States, Guyana and Brazil, as well as market concerns about demand. On Thursday, WTI September crude oil futures closed down $1.60, or 2.06%, at $76.31 per barrel. Brent October crude oil futures closed down $1.20, or 1.49%, at $79.52 per barrel.

While the recent drop in oil prices may bring relief to consumers and many central banks by signaling less inflationary pressure, it could cause pain to OPEC+ countries, such as Saudi Arabia, which is suffering from an economic downturn and is forcing the kingdom to cut investment in flagship economic projects championed by Crown Prince Mohammed bin Salman.

The escalation of tensions in the Middle East is another uncertainty facing OPEC+. According to the latest news from CCTV News, Hamas has indefinitely frozen the ceasefire and personnel exchange agreement negotiations due to the death of Ismail Haniyeh, the leader of the Hamas Political Bureau.

Analysts pointed out that no clear decision was made at this OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting. OPEC+ can theoretically consider its planned fourth-quarter production increase until early September, when customers' loading dates may be finalized.

Media surveys show that oil traders and analysts are divided on whether OPEC+ will continue with its planned production increase:

On the one hand, continued supply recovery would allow OPEC+ countries to recoup sales lost during the production cuts. This would likely be welcomed by members, including the UAE. It could also be a relief to countries such as Russia, Iraq and Kazakhstan, which have dragged their feet on fulfilling their additional production cuts.

On the other hand, Saudi Energy Minister Prince Abdulaziz bin Salman stressed that the organization could pause or reverse the production recovery.

Citi predicts that OPEC+ will not start to restore supply until the middle of next year.

Industry insiders pointed out that OPEC+ plans to increase production from the fourth quarter, which depends largely on the performance of demand this summer. If demand growth is disappointing and the expected inventory reduction is not seen, OPEC+ will change direction.