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The Organisation of Petroleum Exporting Countries (OPEC) and its allies on Sunday agreed to extend most of its deep oil output cuts into 2025, exceeding market expectations.
The decision is coming as oil prices trade near $80 per barrel, below what many OPEC+ members need to balance their budget and as worries over slow demand growth in top oil importer China weigh on prices alongside rising oil stocks in developed economies.
Also on Sunday, the Minister of State Petroleum Resources (Oil), Senator Heineken Lokpobiri, who attended the 37th edition of the meeting on behalf of Nigeria, reiterated Nigeria’s dedication to the Declaration of Cooperation (DoC).
A statement by his spokesperson, Nneamaka Okafor, quoted the minister as emphasising the country’s continued compliance with production adjustments designed to stabilise the global oil market.
In his address, the minister stated that Nigeria remains unwavering in its commitment to the agreements made under the DoC.
“Our adherence to these production adjustments is crucial for maintaining market balance and supporting global efforts toward sustainable oil market stability,” he stated.
During the meeting, several critical items were discussed and agreed upon, including production quotas and strategies to ensure long-term market equilibrium.
The minister highlighted Nigeria’s role in these discussions, noting, “Our participation in this meeting and agreement on key strategies underscores our dedication to fair and equitable outcomes for all member countries.”
“The productive discussions at the ministerial meeting reinforced the collective efforts of OPEC and non-OPEC members to achieve sustainable oil market stability,” Lokpobiri stated.
The minister expressed confidence in the positive impact of the decisions on the global oil market, stating that the collective decisions made during the meeting will contribute significantly to stabilising the global oil market, ensuring a balanced and fair approach for all involved.”
On Sunday, OPEC+ agreed to extend the cuts of 3.66 million bpd by a year until the end of 2025 and prolong the cuts of 2.2 million bpd by three months until the end of September 2024.
OPEC will spend one year on gradually phasing out cuts of 2.2 million bpd starting from October 2024 until the end of September 2025, three OPEC+ sources told Reuters.
Analysts had expected OPEC to prolong voluntary cuts by a few months due to falling oil prices and sluggish demand.
But many analysts had also predicted the group would struggle to set targets for 2025 as it had yet to agree individual capacity targets for each member, an issue that had previously created tensions.
The United Arab Emirates, for instance, has been pushing for a higher production quota arguing its capacity figure had been long under-estimated.
But in a surprise development on Sunday, OPEC+ postponed the discussions on capacities until November 2025 from this year.
Instead, the group agreed a new output target for the United Arab Emirates which will be allowed to gradually raise production by 0.3 million bpd, up from the current level of 2.9 million.
OPEC+ agreed that it would use independently assessed capacity figures as guidance for 2026 production instead of 2025 – postponing a potentially difficult discussion by one year.
The meetings lasted less than four hours – an unusually small amount of time for such a complex deal.
OPEC+ sources have said OPEC’s de facto leader and biggest producer Saudi Arabia had spent days pre-cooking the deal behind the scenes.
Its influential energy minister Price Abulaziz bin Salman invited some key ministers – mostly those who contributed to the voluntary cuts – to come to the Saudi capital Riyadh on Sunday despite meetings being largely scheduled online.
The countries which have made voluntary cuts to output are Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates.
OPEC+ will hold its next meeting on December 1, 2024, with the cartel adding that it will “Hold the OPEC and non-OPEC Ministerial Meeting (ONOMM) every six months in accordance with the ordinary OPEC scheduled conference.”
Emmanuel Addeh
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