[PRIMER] JMMC/OPEC+ on Wednesday; eight members’ policy-setting meeting on Saturday

OVERVIEW:

• OPEC+ will virtually convene its Joint Ministerial Monitoring Committee (JMMC) on Wednesday, with the full OPEC and OPEC+ meetings also set to take place following the JMMC.


• However, the meeting of the eight OPEC+ countries conducting the voluntary cuts will now take place on May 31st as opposed to the originally scheduled June 1st.


• Market focus will be on the Saturday meeting, assuming no policy decision is front-run and announced at the Wednesday meeting.


• OPEC sources will likely be noisy on the wires ahead of the weekend meeting.

EXPECTATIONS

• Delegates are reportedly discussing the prospect of a third consecutive output hike, according to Bloomberg sources, on May 22nd.


• Bloomberg sources suggest a potential 411k BPD increase for July is under consideration — three times the originally scheduled monthly hike — although no final decision has yet been reached.


• Russian Deputy PM Novak on Tuesday, when asked whether OPEC+ discussed an oil output increase by another 411k BPD from July, replied that nothing has been discussed yet.


• The move would maintain Saudi’s recent strategy of accelerating supply additions in an effort to enforce discipline on members exceeding quotas.


• At the last meeting, Saudi Arabia issued a firm warning to overproducing nations, threatening further output increases unless compliance improves.


• Reuters sources, on May 21st, suggested Russia has gradually accepted Saudi’s strategy to increase output to “punish” non-compliant members such as Iraq and Kazakhstan, alongside pressuring US Shale.

US SHALE

• Reuters sources, on May 21st, suggested one of the reasons behind the May 3rd decision to bring back output more rapidly than planned, was in a bid to retake some market share from the US. "It is time to return lost market share," one source said.


• Sources added that to hurt Shale producers today, OPEC+ would need oil prices brought down to “less than USD 50-60/bbl”.


• Q1 Dallas Fed survey suggested Shale producers need oil prices at USD 65/bbl on average to drill profitably.


• IMF estimates show Russia needs oil at USD 77/bbl, and Saudi Arabia USD 90/bbl to balance budgets. Saudi officials are reportedly prepared to endure USD 60/bbl, even if it requires borrowing, according to Reuters.

KAZAKHSTAN

• Some dissatisfaction concerning lower group production has been noted over the past few weeks.


• On April 23rd, Kazakhstan's Energy Minister said its national interests take priority over OPEC+ interests when it comes to oil output levels. Kazakhstan's Energy Minister added that the country cannot reduce oil output from old oilfields, as it would destroy them, and they cannot order oil majors to cut output either, via Reuters.


• Shortly after, Kazakhstan said it is committed to constructive work with OPEC+, is fulfilling its OPEC+ obligations, according to the energy minister, who added that Kazakhstan has ongoing dialogue with OPEC+ on oil production, and national interest as well as international obligations. Kazakhstan said it seeks mutually acceptable solutions with OPEC+.


• It was later, on May 6th, reported that Kazakhstan is weighing its options to fulfil its OPEC+ cut obligations, according to Bloomberg, after Saudi doubled-down on “quota-cheats”.


• Kazakhstan at the May 3rd OPEC meeting agreed to produce 1.5mln BPD in June (vs 1.85mln BPD in March) but did not provide a plan on how it would reach those levels.

HOUSE VIEWS

• 
  Goldman Sachs: Predicts that OPEC+ will pause further hikes after agreeing on the increase for July. GS added that lower oil prices in 2025–2026 (i.e. a near-term surplus) may lead to an earlier and lower peak for US shale production.


• 
  Onyx Commodities: “If there is indeed a shift in policy toward market share and away from price defence, it then makes sense to unwind quickly.”


• 
  ING: “We’re assuming in our balance sheet that the group will agree to increase output by another 411k b/d in July. This should keep the market well supplied over the second half of this year.”


• 
  HSBC: Expects OPEC+ to announce another accelerated supply hike for July, similar to May/June and then pause in Q1'26. HSBC sees rising downside risks to Brent forecasts.

27 May 2025 - 07:45- ForexGeopolitical- Source: Newsquawk