OPEC+ slashes crude output target as Nigeria maintains quota

The Organisation of Petroleum Exporting Countries and its allies, (OPEC+) has agreed to slash its crude output target by two million barrels a day (bpd) from November, NRTC reports.

This is the largest cut since the organisation reduced quotas by 9.7million bpd at the start of the Covid-19 crisis in 2020. The group has also agreed to extend its production cooperation agreement until the close of 2023.

Nigeria and other countries lagging in their production output will retain their quota. Meanwhile, Saudi Arabia takes the largest cut. 14 out of the 19 countries undershot their August quotas as Nigeria, Russia and Kazakhstan had the biggest shortfalls.

Nigeria’s production is currently less than the 1.826 million bpd (mbpd) quota assigned to it as a result of crude theft.

The Nigerian National Petroleum Company Limited (NNPC) on Tuesday had disclosed that in its effort to fight rising crude oil theft, it has so far shut down the operations of 395 illegal refineries.

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NNPC Ltd Group CEO, Mele Kyari in a briefing with the Senate ad hoc committee on oil theft in Nigeria, said that other discoveries include an illegal connection of four kilometers route into the sea running from its major Forcados line. He estimated the connection to have been in existence for about nine years.

He also acknowledged that crude theft reduced the country’s oil production to around 1.2m barrels per day from 1.8 million.

OPEC+’s decision came against a backdrop of concerns about an inflation-driven economic slowdown believed to weigh on global oil demand.

Uncertainty around global economy and oil market outlook key to new decision – OPEC

The decision of OPEC+ on the crude output target was taken “in light of the uncertainty that surrounds the global economy and oil market outlooks, and the need to enhance the long-term guidance for the oil market,” the OPEC Secretariat said.

We had always expected supply growth to slow later this year and into 2023, but this latest OPEC+ action has reinforced our view that prices will end the year a little higher,” Caroline Bain, a chief commodities analyst for Capital Economics, said in a note following the announcement on Wednesday.