A barrel of Brent crude dropped to $78 after the Organisation of Petroleum Exporting Countries declared on Wednesday, November 22, that the oil producer conference originally slated for November 26 had been rescheduled for November 30.
The Times reported that following the announcement, the price of Brent crude fell to $78 per barrel; as of 3:40 PM, GMT+1, Brent crude was $78.86, as OPEC verified that the much-anticipated meeting had really been postponed. Recall that as of late September 2023, the price of a barrel of Brent crude was $98.
According to sources, Saudi Arabia is in negotiations with other producers who are not fulfilling their output quota, which is why the conference was postponed.
Recall that on November 21, Nigeria was at the risk of producing just 1.38 million barrels of crude oil per day in 2024, as specified by OPEC in June 2023, having failed to significantly increase its oil production level by the November 2023 deadline set by OPEC.
This possible reduction is the result of these African nations’ inability to reach their assigned production targets by November 2023. There have been reports of increasing strain within OPEC+ as a result of conflicts among African members over the likelihood of lower oil output quotas.
The possibility of lower quotas for 2024 was accepted by a number of sub-Saharan African OPEC+ members back in June 2023, including Nigeria, Angola, Equatorial Guinea, the Republic of Congo, Gabon, Sudan, and South Sudan. But this cut would only go into effect if, by November 2023, they were unable to show that their manufacturing capacity had improved.
Nigeria’s production of crude oil, excluding condensates, peaked in October 2023 at 1,350,573 barrels per day. On the other hand, daily production varied between 1 million to 1.34 million barrels over the course of the year. These numbers are much less than the nation’s allotted capacity of 1.78 million barrels per day for 2023.
The data presented indicates that Nigeria has not achieved significant progress in augmenting its crude oil production, hence giving rise to apprehensions over its capacity to fulfill upcoming limits established by OPEC+.
The Nigeria Liquefied Natural Gas Limited has verified that the situation underscores the difficulties the country confronts in increasing its oil production capacity, specifically crude oil theft, which has also impacted natural gas output.
According to Reuters, Goldman Sachs believes there is a possibility that a more substantial reduction in oil output may be discussed at the next meeting of OPEC+ oil producers. It is anticipated that Russia and Saudi Arabia may decide to prolong their voluntary output cuts through at least the first quarter of 2024.
Goldman Sachs estimates that there is a 35% chance that significant OPEC producers will elect to extend the group’s production reduction during the meeting,.
This possible action is being considered as a risk mitigation strategy against the possibility that Brent prices may drop below $80 per barrel, especially in light of the predicted decline in demand in the first quarter of 2024.
This acts as a type of insurance to keep prices stable in the face of shifting market conditions.
