Page 10 - AfrOil Week 36 2022

AfrOil PERFORMANCE AfrOil

OPEC+ group reverses recent production

quota increase with first cut in 18 months

THE OPEC+ group of oil producers met this The reduction swiftly dispelled any return of
week to decide their next production quotas, questions about the OPEC+ group’s relevance
electing to row back on last month’s increase in and while the market’s thirst for oil has tested
the wake of falling prices and demand concerns. the top end of production, a willingness to cut
As expected, the 100,000 barrel per day (bpd) output is likely to ensure the producers keep
uptick added in August was removed again on crude prices within levels they deem acceptable
September 6, with the group saying it would – reportedly a minimum of $90 per barrel.
meet again on October 5. In a press release pub- Speaking to Forbes Middle East, Dr. Yousef
lished by OPEC, the group noted “the adverse Alshammari, CEO & Head of Oil Research at
impact of volatility and the decline in liquidity CMarkits, said: “It is expected that the cut will
on the current oil market and the need to sup- lead to around 43,000 bpd of actual production
port the market’s stability and its efficient func- being cut from Saudi Arabia, UAE and Kuwait,
tioning.” It also reiterated its “readiness to make while other producers are already falling behind
immediate adjustments to production in differ- their quotas. The gap between OPEC+ quota
ent forms, if needed.” and actual production is already close to 3mn
The OPEC+ group’s caution occurs against a bpd.”
backdrop of concerns about a global recession However, he added that the “decision reflects
and the apparently rising possibility that Iranian that OPEC+ is still in control and is ready to take
oil will return to the market. further measures to balance the markets espe-
The quota cut is the group’s first for 18 cially under fears of recession and weakening
months and follows months of over-compli- demand in the months ahead.”
ance with quotas – that is, underproduction. It comes as yet another blow to consumer
Members have been struggling to raise output nations that see lower oil prices – and higher
as they max out capacity and Russian levels are supplies – as a means of driving economic
depressed by domestic economic problems growth. None would be more disappointed than
and other sanctions-related issues. As a result, US President Joe Biden, who the White House
the impact on markets has been muted, but the said was “determined to continue to take every
message behind the move may signal what is to step necessary to shore up energy supplies and
come. lower energy prices.” In recent weeks, there have
While Saudi Arabia has been able to increase been reports suggesting that this could include
output to around 10.9mn bpd in July and August an easing of restrictions on the purchase of Ven-
from 10.7mn bpd in June, there are concerns ezuelan and Iranian crude, while talks between
about its ability and desire to raise production international governments and Tehran on
towards majority state-owned NOC Saudi Ara- the renewal of the Joint Comprehensive Plan
mco’s self-proclaimed 12mn bpd maximum sus- of Action (JCPOA) appear to be progressing
tainable capacity (MSC). towards a conclusion.. ™

POLICY
Poland’s president visits West African

states in bid to replace Russian gas

REGIONAL POLISH President Andrzej Duda visited Nige- co-operation and the African states’ relations
ria, Côte d’Ivoire and Senegal this week in the with Russia.
first official visit of a Polish head of state to a In Nigeria, Duda met his Nigerian coun-
West African country. terpart Muhammadu Buhari, where the two
The timing is no coincidence, nor was it a leaders spoke about boosting imports of LNG,
courtesy visit. Duda’s trip is focused on energy petroleum and agricultural goods.

P10 www. NEWSBASE .com Week 36 08•September•2022