Nigeria and Angola have opposed a reduction in their crude oil production quotas by the Organisation of Petroleum Exporting Countries.
On Tuesday, Bloomberg reported that OPEC was no closer to resolving the deadlock over oil production quotas for some African members that had already forced the group to delay a critical meeting amid faltering prices, according to delegates.
The report stated that the Saudi-led alliance had not been able to reach an agreement with Angola and Nigeria, which were pushing back against lower quota limits for 2024 that reflect their diminished production capabilities, delegates told Bloomberg, asking not to be named because the information was private.
The stalemate may not be resolved before the scheduled OPEC meeting on November 30, 2023, potentially requiring a further delay, one delegate said.
OPEC and its partners need to finalise production policy for 2024, with market watchers predicting that further cuts were needed as crude prices sag toward $80 per barrel on the prospect of a renewed surplus.
Saudi Arabia, which has been making a voluntary oil production reduction of one million barrels per day since July, is asking other members of the coalition to reduce their quotas to share the burden of cuts.
Angola and Nigeria are disputing changes to their oil production targets that were provisionally agreed when OPEC last met in June.
Those new quotas were subject to review by external consultants and both countries were unhappy with the revised figures.
Nigeria is now seeking a quota of 1.58 million barrels per day for 2024, a slight increase from the provisional level, one delegate said.
Luanda is proposing 1.18 million barrels per day, which is lower than the figure agreed in June but higher than the consultants’ estimate, the delegate said.
Failure to reach consensus could be very costly for the 23-nation coalition, which relies on oil revenue to cover government spending.
Crude traders have largely priced in that group leaders Saudi Arabia and Russia will extend their 1.3 million barrels per day of additional supply curbs through the first quarter of 2024.
Many are banking on even more muscular action from the wider alliance.
“With fundamentals softening and market sentiment bearish, OPEC may need to announce another formal cut,” analysts at Eurasia Group led by Raad Alkadiri said in a report on Monday.
Anything short of a one million barrels per day reduction could send prices to the low $70s, they added.
As part of the deal agreed in June, the United Arab Emirates secured the right to increase production modestly in January in order to deploy recent capacity additions. It’s unclear whether there’s any pressure now for Abu Dhabi to relinquish that boost in order to shore up flagging markets.
Source: Punch
