OPEC Keeps Oil Production Quota Unchanged, to Continue with 2mbpd Cut

Emmanuel Addeh in Abuja

The Organisation of Petroleum Exporting Countries (OPEC) and its allies known as OPEC+ yesterday resolved to stick to their oil output targets, falling back to a decision it took last month to slash oil output by two million barrels per day.

It came as the oil market struggles to assess the impact of a slowing Chinese economy on demand and a G7 price cap on Russian oil on supply.

The Group of Seven is an intergovernmental political forum consisting of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

The oil cartel had slashed Nigeria’s oil production output by 84,000 bpd as part of the cuts before the latest decision, although the country has been unable to meet its quota which peaked at about 1.83 million bpd for over a year.

The country’s production had fallen to its lowest levels in a long time, with industry data showing output hitting new lows, although it improved to 1.014 million bpd in October. The production cut by OPEC for November was an attempt to reverse a price fall in the global market.

OPEC+ angered the United States and other Western nations in October, when it agreed to cut output by two million bpd, about two per cent of world demand, from November until the end of 2023.

Washington accused the group and one of its leaders, Saudi Arabia, of siding with Russia despite Moscow’s war in Ukraine.

Yesterday, the group of oil producers decided to keep the policy unchanged. Its key ministers would next meet on February 1, for a monitoring committee while a full meeting is scheduled for June 3-4, a statement from the organisation said.

“In line with the decision…which was purely driven by market considerations and recognised in retrospect by the market participants to have been the necessary and the right course of action towards stabilising global oil markets… the participating countries reiterated their readiness to meet at any time and take immediate additional measures to address market developments and support the balance of the oil market and its stability if necessary,” OPEC said yesterday.

The participating countries decided to adjust the frequency of the monthly meetings to become every two months for the Joint Ministerial Monitoring Committee (JMMC).

It also reiterated the critical importance of adhering to full conformity and compensation mechanism taking advantage of the extension approved earlier.

On Friday, G7 nations and Australia agreed $60 per barrel price cap on Russian seaborne crude oil in a move to deprive President Vladimir Putin of revenue while keeping Russian oil flowing to global markets.

But Moscow said it would not sell its oil under the cap and was analysing how to respond.

Many analysts and OPEC ministers have said the price cap was confusing and probably inefficient as Moscow has been selling most of its oil to countries like China and India, which have refused to condemn the war in Ukraine.

The price cap measure could have an uncertain effect on the price of oil as worries over lost supply through the boycott compete with fears about lower demand from a slowing global economy.