PREVIEW - OPEC-Non-OPEC Monitors To Assess Oil Cuts Volume Amid Iran Sanctions In Abu Dhabi Sunday

PREVIEW - OPEC-Non-OPEC Monitors to Assess Oil Cuts Volume Amid Iran Sanctions in Abu Dhabi Sunday

ABU DHABI (UrduPoint News / Sputnik - 11th November, 2018) The Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) will gather on Sunday in the United Arab Emirates' (UAE) capital of Abu Dhabi to discuss the required volumes of oil production cuts after the recently-implemented US sanctions against Iran's energy industry.

The JMMC comprises six members - co-chairs Saudi Arabia and Russia, Kuwait, Oman, Venezuela and Algeria - plus the United Arab Emirates, this year's president of the OPEC Conference.

OPEC and several non-OPEC oil producers, including Russia, reached a deal in Vienna in 2016, agreeing to cut oil output by a total of 1.8 million barrels per day (mb/d) in an effort to stabilize global oil prices. Non-OPEC states pledged to jointly reduce oil output by 558,000 barrels per day. The agreement, which came into effect in 2017, has been extended twice since then and is expected to remain in force until the end of 2018.

However, at the last meeting in June, the 25 countries agreed to decrease its consistent over-implementation with output cuts and boost production by 1 mb/d starting July to offset unstable production levels in Venezuela, Libya and potential decrease in oil production in Iran due to reimposed US sanctions, which came into full effect on Monday.

The Sunday meeting specifically coincided with the week the anti-Iranian sanctions were reimposed, which aim to bring Iranian oil production to zero, so as to assess any changes to market conditions and need from OPEC-non-OPEC to act on them. However, on Monday the United States also granted waivers to eight nations - China, Greece, India, Italy, Japan, Turkey, South Korea and Taiwan - to purchase oil from Iran for 180 days, which made oil producers recalculate real oil demand deficit that may come from involuntary oil cuts by Tehran.

Consequently, according to several media outlets, the OPEC-non-OPEC committee members are set to discuss on Sunday several options of how to proceed with their intention to bring down conformity levels with oil production cuts down to 100% collectively, which corresponds to the output boost of 1 mb/d that mainly comes from Saudi Arabia and Russia. Among these options are for the 25 oil producers to proceed with the 1-million-barrel-per-day increase and face the build-up of inventories next year or return to the individual 100%-conformity with oil production quotas, which would mean Riyadh and Moscow will have to return to limiting oil output. The need for changing of the OPEC-non-OPEC course is further highlighted by the falling oil prices, which dropped below $70 per barrel for the first time in over six months.

Moreover, the JMMC meeting will be followed by the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) to be held November 12-15, which will feature three ministerial sessions set to be attended by 42 CEOs of global national oil companies, as well as over a dozen of OPEC-non-OPEC ministers, including Saudi Energy Minister Khalid al-Falih and Russian Energy Minister Alexander Novak. The ADIPEC conference may further serve as a platform for discussion on further actions to stabilize the global oil market.

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