OPEC+ Delay Meeting as Disagreements Over Production Quotas Persist
OPEC+ members have postponed their November meeting as negotiations over oil production quotas continue to strain the alliance. Sources within the group reveal that setting production targets remains a key point of disagreement among member countries. The challenge lies in the fluctuating nature of oil production, which makes it difficult to establish a permanent production target. Consequently, countries aim to negotiate higher production reference levels, enabling them to reduce their output cuts while still complying with the agreed targets.
During the previous meeting in June 2023, OPEC+ managed to strike a complex deal that revised production targets for several members. The United Arab Emirates (UAE), for instance, secured a new target of 3.219 million barrels per day (bpd) for 2024, allowing it to add 200,000 bpd to its production. The UAE plans to further increase its oil production capacity to 5 million bpd by 2027. The country has long expressed frustration with other members underproducing while it was unable to fully utilize its own capacity.
On the other hand, countries like Nigeria and Angola faced reduced targets due to underinvestment and security issues. Nigeria saw its target reduced to 1.38 million bpd from 1.74 million bpd, while Angola’s target was cut to 1.28 million bpd from 1.45 million bpd. To ensure accuracy, OPEC assigned three independent consultancies – IHS, Rystad Energy, and Wood Mackenzie – to verify the production figures of these countries for the remainder of 2023. Angola, in particular, must have its new reference output level verified by the independent sources to maintain its position.
Furthermore, the production levels assigned to Congo and Nigeria may be updated to reflect their average output for 2024, as assessed by the three consultancies. Nigeria could be granted a higher 2024 production target of 1.58 million bpd if its capacity to produce at this level is confirmed by the independents. Analysts anticipate Nigeria to advocate for increased production numbers in the coming days due to a new president and growing economic concerns. However, bridging the gap between Nigeria and Angola might prove challenging, as Angola has been a more difficult member since joining OPEC in 2007.
According to the June agreement, the three independent sources will also verify the capacity plans of all OPEC+ members by the end of June 2024. This verification will determine reference production levels for 2025. Amidst ongoing disagreements, OPEC+ aims to find a delicate balance that addresses the concerns and objectives of each member during their upcoming meeting at the end of the year.
The challenges OPEC+ faces in reaching an agreement on oil production quotas highlight the complexities of managing a diverse group of countries with varying priorities and capacities. Balancing these interests is crucial to maintaining stability in global oil markets while meeting the growing demand for energy worldwide. As negotiations continue, the global community closely watches OPEC+ decisions, which have significant implications for oil prices and the wider economy.
