Nigeria and Angola have resisted a proposed reduction in their crude oil production quotas by the Organization of the Petroleum Exporting Countries (OPEC), as reported by InfoStride News. The ongoing deadlock has led to a delay in a critical meeting scheduled for November 30, 2023, where OPEC and its partners need to finalize production policy for 2024.
According to Bloomberg, the Saudi-led alliance has been unable to reach an agreement with Angola and Nigeria, both of which oppose lower quota limits for 2024 that reflect their reduced production capabilities. The disagreement centers on changes to the oil production targets agreed upon in June, which were subject to review by external consultants. However, both countries expressed dissatisfaction with the revised figures.
Nigeria is currently seeking a quota of 1.58 million barrels per day for 2024, a slight increase from the provisional level agreed upon in June. On the other hand, Luanda is proposing 1.18 million barrels per day, which is lower than the June figure but higher than the consultants’ estimate.
The failure to reach a consensus could have significant repercussions for the 23-nation coalition, heavily reliant on oil revenue to cover government spending. The situation is further complicated by the need for additional production cuts to stabilize crude prices, which have been trending towards $80 per barrel due to concerns about a renewed surplus.
Saudi Arabia, which has voluntarily reduced its oil production by one million barrels per day since July, is urging other coalition members to lower their quotas to collectively share the burden of cuts. However, with Angola and Nigeria resisting, the deadlock may persist, potentially requiring further delays in resolving the production policy for 2024.
The stakes are high, as crude traders have factored in the expectation that leading coalition members, Saudi Arabia and Russia, will extend their 1.3 million barrels per day of additional supply cuts through the first quarter of 2024. Analysts at Eurasia Group, led by Raad Alkadiri, warn that anything short of a one million barrels per day reduction could push prices to the low $70s.
As part of the deal agreed upon in June, the United Arab Emirates secured the right to modestly increase production in January to accommodate recent capacity additions. However, it remains uncertain whether there is any pressure on Abu Dhabi to reconsider this boost to support struggling markets.
In summary, the impasse between OPEC and African members Nigeria and Angola over oil production quotas highlights the challenges faced by the coalition in navigating a complex energy landscape. The outcome of the scheduled meeting on November 30, 2023, will have far-reaching implications for the global oil market and the economies of the involved nations.
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