The committee overseeing the OPEC+ crude production agreement has highlighted the vital importance of producers adhering to their quotas and compensation plans. This statement followed a meeting held on April 5, where the group refrained from announcing any changes to OPEC+ policy, even as oil prices experienced a sharp decline. On April 3, eight OPEC+ producers, who have been implementing voluntary production cuts totaling 2.2 million barrels per day (b/d), reached an agreement to increase production quotas more than initially planned for May. This unexpected decision has intensified the effects of recent U.S. tariff announcements and retaliatory actions from trade partners, which have contributed to the drop in the Platts Dated Brent crude price to $67.895 per barrel on April 4, marking the lowest price since August 2021.
During the April 5 meeting, the Joint Ministerial Monitoring Committee, co-chaired by Saudi Arabia and Russia, assessed crude production data for January and February, reaffirming the need to monitor compliance with the production deal closely. Compliance issues have been a significant source of tension within the group, influencing the unexpected decision to raise quotas by a total of 411,000 b/d in May. In its announcement regarding the decision, OPEC emphasized ongoing stable market fundamentals and a positive market outlook. Factors contributing to the policy change may include expectations of increased seasonal demand and potential production drops from Iran and Venezuela under intensified sanctions.
The OPEC Secretariat has outlined plans for overall compensation cuts of 309,000 b/d, suggesting that actual production levels may rise by only 102,000 b/d in May. Revised compensation plans are due to the secretariat by April 15, and such cuts could mitigate the supply impact of the increased quotas. UBS noted that with financial markets in turmoil, oil prices are expected to remain volatile in the near future, influenced by potential tariff adjustments, peace talks in the Middle East, and U.S. sanctions affecting significant crude volumes. The voluntary production cutters are set to meet again on May 5 to assess output for June, with the next Joint Ministerial Monitoring Committee meeting, along with a full OPEC+ ministerial meeting, scheduled for May 28.
The group retains the option to hold extraordinary meetings if market conditions necessitate.