A group of key Opec+ ministers will hold their bi-monthly meeting next week to discuss the state of the market and, for the first time in four years, they will do so with an expectant and highly vocal US president watching from afar.
The meeting of the Joint Ministerial Monitoring Committee (JMMC) on Monday, 3 February, will be its first since eight Opec+ members, led by Saudi Arabia, opted in December to again delay the gradual return of 2.2mn b/d of production to the market, this time by three months to April. They also agreed to slow the pace of the return, so the full amount would come back over 18 months rather than 12.
The delay and slowdown were designed "to support market stability," the Opec secretariat said at the time, an implicit nod to an uncertain demand picture and projections of a looming supply surplus. One month on the market landscape looks much the same, with the IEA most recently estimating a 720,000 b/d excess in 2025 even if Opec+ does not begin unwinding its cuts.
With the eight not due to begin returning any output for two months, little was expected of the 3 February meeting beyond a swift thumbs-up to the current policy. The JMMC remit is limited to making recommendations, with policy decisions made at full meetings of the Opec+ group — the next is scheduled for 28 May.
But new US President Donald Trump, just three days into his new term, appeared to throw those expectations into disarray.
"I'm… going to ask Saudi Arabia and Opec to bring down the cost of oil," Trump told the World Economic Forum in Davos on 23 January, something they could only realistically do by raising production. "I'm surprised they didn't [do that] before the [US] election," Trump said.
Déjà vu all over again
With that, Trump reverted to his tactic of negotiating with, and putting pressure on, the producer group through the media ꟷ a regular feature of his first term, albeit one that had mixed results.
"Historically, when Trump speaks, [Opec] will hear him out. And more times than not, it will be discussed internally," a delegate source said. "That is the reality."
Kazakhstan's energy minister Almasadam Satkaliev said as much this week, confirming the group "will attempt to reach a common position" on Trump's call.
But some delegates said that listening to someone and acting on that are different things, and they stressed the group will ultimately do what is in the best interest of the oil market and of the collective.
Opec+ "remains committed to its strategy, which is based on market fundamentals, rather than external political statements… [or] short-term remarks," one said. Another echoed this, saying Opec+ will always lean towards keeping the oil market balanced "regardless of what Trump says."
A fourth delegate did say however that the group may ultimately be pressured into "compromising" with Trump, particularly if the US president makes good on his campaign promises to tighten the sanctions screws on the likes of Iran and Venezuela, which could in turn hit oil supply.
"In this context, I feel Opec may have no choice but to compromise with Trump," the delegate said.
That the group of eight plans to raise output steadily from the second quarter should keep Trump at bay for now, particularly with global crude prices below $80/bl. But if demand concerns persist, and spark debate among the eight about whether they should again delay the unwind, the Trump factor could tip the scales for proceeding.
