Nigeria and Angola have expressed their opposition to a reduction in their crude oil production quotas proposed by the Organization of the Petroleum Exporting Countries (OPEC).
Bloomberg reported on Tuesday that OPEC was facing challenges in reaching a consensus on oil production quotas for some African members, leading to a delay in a crucial meeting due to the prevailing uncertainties in oil prices, according to anonymous sources familiar with the matter.
Delegates revealed that the alliance led by Saudi Arabia had encountered resistance from Angola and Nigeria, both resisting the imposition of lower quota limits for 2024 that reflect their reduced production capacities.
The deadlock appears unlikely to be resolved before the scheduled OPEC meeting on November 30, 2023, possibly necessitating further delays, as per one delegate’s statement.
OPEC and its partners need to finalize the production policy for 2024, with market analysts suggesting additional cuts are necessary as crude prices hover around $80 per barrel amid the possibility of a renewed surplus.
Saudi Arabia, which has voluntarily reduced oil production by one million barrels per day since July, is urging other coalition members to lower their quotas to share the burden of cuts.
Angola and Nigeria are contesting changes to their previously agreed oil production targets from the June OPEC meeting. These new quotas were subject to review by external consultants, and both countries expressed dissatisfaction 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, according to one delegate. Meanwhile, Luanda is proposing 1.18 million barrels per day, which is lower than the figure agreed upon in June but higher than the consultants’ estimate, the delegate stated.
The failure to reach a consensus could have significant consequences for the 23-nation coalition, heavily reliant on oil revenue to cover government spending. Crude traders have largely factored in expectations that key coalition members, Saudi Arabia and Russia, will extend their additional supply curbs through the first quarter of 2024.
Analysts at Eurasia Group led by Raad Alkadiri suggested that, with softening fundamentals and bearish market sentiment, OPEC might need to announce another formal cut. They warned that anything less than a one-million-barrel-per-day reduction could drive prices down to the low $70s.
As part of the agreement reached in June, the United Arab Emirates secured the right to modestly increase production in January. However, it remains uncertain whether there is pressure on Abu Dhabi to reconsider this boost to support struggling markets.
