The global oil market is likely to move into deficit as early as this quarter. The most significant driver of this shift has been strong compliance with the production cuts agreed by OPEC and its partners (OPEC+) at the group’s historic April meeting. The cuts agreed at that meeting were reinforced at the recent 19th Joint Ministerial Monitoring Committee (JMMC) meeting, which extended the large, initial cuts by one month. It also laid out a mechanism whereby non-compliant members would add compensatory cuts in July, August and September in addition to their already agreed production adjustments for these months. These efforts were accompanied by recovering demand, and declines in United States (U.S.) shale and oil sands, with other conventional production expected to help balance the market going forward.
