OPEC and its allies have fixed the date of their upcoming meetings in Vienna for July 1-2, ending a protracted scheduling spat that the organization’s president had said was keeping the oil market on edge.
OPEC announced the change Wednesday in an email to reporters and analysts, and its website has also been updated with the new dates, which replaced the previously scheduled June 25-26 meetings.
With 11 days left before the OPEC/non-OPEC coalition’s 1.2 million b/d production cut agreement is set to expire at the end of June, several ministers have signaled that an extension is likely, as oil prices have slumped on downbeat global economic forecasts.
But the dithering over the meeting date, along with a recent ratcheting of Middle East geopolitical tensions, threatened to leave the group exposed to doubts about its resolve.
“As the market remains fragile and somewhat jittery as a result of this indecision, as well as other factors, it is imperative that we show solidarity in scheduling these important meetings,” Venezuelan oil minister Manuel Quevedo, who holds OPEC’s rotating presidency this year, wrote to his coalition counterparts Tuesday, in a letter seen by S&P Global Platts.
Under the plan, which was proposed by Quevedo in his letter and formally approved Wednesday, a nine-country Joint Ministerial Monitoring Committee will meet the morning of July 1, before OPEC convenes that afternoon. The 10 non-OPEC partners led by Russia will join the talks the next day.
The JMMC, co-chaired by Saudi Arabia and Russia, is tasked with monitoring market conditions, assessing compliance with production quotas, and making recommendations to the full OPEC/non-OPEC coalition.
The meeting agenda may also include the signing of a much-debated charter formalizing the cooperation between OPEC and its non-OPEC partners.
Olivier Jakob, an analyst with consultancy PetroMatrix, said that by moving the meeting, the coalition avoided announcing any policy decisions on June 25, when the expiry of Brent August options could lead to market volatility. But the new date comes right before the US Independence Day holiday on July 4, so trading volumes could be thinner, also potentially leading to a choppy market.
Growing tensions
The 24-country producer bloc is in its third year of output cuts aimed at propping up oil prices and inducing draws of crude from storage.
The current round of quotas, which exempt sanctions-hit Iran and Venezuela, along with war-torn Libya, went into force in January and ends on June 30.
Having canceled talks set for late April so it could assess the impact of US sanctions on Iran, the coalition agreed to next meet June 25-26 in Vienna to decide on the deal’s future.
Russia then requested a change to July 3-4 — after the G20 summit in Japan on June 28-29, so that those economic negotiations could play out before the OPEC/non-OPEC coalition meets.
Iran, Algeria and Kazakhstan initially objected, according to delegates, but by the beginning of this week, Iran remained the lone holdout.
In the midst of negotiations, a series of alleged attacks on oil tankers near the Strait of Hormuz and a key Saudi pipeline over the past month heightened tensions in the Middle East.
Saudi Arabia has blamed several of the incidents on long-standing geopolitical rival Iran, which has seen its oil exports plummet under US sanctions.
Iran has denied any involvement in the incidents and has, in turn, accused Saudi Arabia of collaborating with the US to harm Iran’s economy and divide OPEC.
Russian energy minister Alexander Novak flew to Tehran on Monday to meet with Iranian counterpart Bijan Zanganeh to hammer out a deal on the meeting date, but Zanganeh said he had prior commitments that made him unable to attend any talks between July 3-7. He then proposed a new timeframe of July 10-12.
Quevedo then said in his letter that his suggested date of July 1-2 would alleviate all concerns, while preventing a significant delay in any decision on the supply cuts.
In anticipation of every country being on board, Quevedo said he had instructed the OPEC secretariat “to proceed in earnest with the administrative and logistic preparations for these meetings, which are already behind schedule”.
Source: S&P Global Platts