Oil prices have risen some 25% since the beginning of the year thanks, in large part, to production cuts by OPEC and its allies, no doubt buoying the sentiments of ministers ahead of Monday’s monitoring committee meeting in Azerbaijan.  But tepid demand growth going forward and an uncertain supply outlook will give the OPEC/non-OPEC coalition pause when they discuss the future of their supply accord, which is set to expire in June.

OPEC watchers say the six-country Joint Ministerial Monitoring Committee is unlikely to announce any recommendations to change the 1.2 million b/d cut agreement, though Saudi officials have said they would like to see it extended through at least the end of the year. But even that preference contains the caveat of maintaining flexibility should production in Iran and Venezuela continue to fall under US sanctions.

“It is [US President Donald] Trump and not OPEC that holds most of the ‘wildcards’ that could shape market outcomes in 2019,” the Oxford Institute of Energy Studies’ Bassam Fattouh and Andreas Economou wrote in a recent commentary.  The US has signaled it may impose additional sanctions targeting Venezuelan state oil company PDVSA if the country’s president, Nicolas Maduro, does not step aside.  But US officials have also said their decision on whether to renew sanctions waivers on Iranian crude purchases, which expire May 5, may depend on the severity of Venezuela’s decline.

Venezuela pumped 1.10 million b/d in February, according to the latest S&P Global Platts survey of OPEC production, down 30% year on year.  The International Energy Agency on Friday said OPEC may have to tap into its 2.8 million b/d of spare production capacity to prevent a market squeeze if Venezuela collapses further.  OPEC’s own analysis arm, however, said Thursday that slowing global economic growth will hurt oil demand, while supplies from outside of OPEC were projected to rise faster than expected.