According to Bloomberg’s survey, there was a stable level of crude oil production from the Organisation of Petroleum Exporting Countries (OPEC) in the previous month, prior to the implementation of new reduction measures by the alliance. Nigeria played a significant role in this stability by increasing its output by 50,000 barrels per day (bpd). The survey relied on a combination of ship-tracking data, input from officials, and estimates provided by Kpler Ltd., Rapidan Energy Group, and Rystad Energy A/S. In December, OPEC maintained its commitment to supply restrictions by pumping an average of 28.05 million barrels per day. Despite decreases in production from the United Arab Emirates and Angola, this was counterbalanced by contributions from countries like Nigeria.
Increases in supply were seen in other areas, offsetting the decline from these two members. Nigeria, in accordance with a newly negotiated quota, raised its daily supply by 50,000 barrels to reach 1.49 million in December. This data aligns with figures previously released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), where the country’s direct communication channels reported a production of 1.25 million barrels per day. Nigeria’s crude oil production for November amounted to 1.37 million bpd, as reported by OPEC through secondary sources. However, neither the NUPRC nor OPEC has yet disclosed the output data for December.
Action is taken to prevent a new surplus and safeguard crude prices.
A decline in output is anticipated for this month as OPEC+, the wider coalition, commences additional reductions of approximately 900,000 barrels per day, according to Bloomberg. This action aims to prevent a new surplus and safeguard diminishing crude prices. Over the past four months, oil futures have plummeted by around 20% from their previous high of $100 per barrel due to the overwhelming influx of supplies from the US and competing nations affiliated with OPEC. The excessive amount of crude may pose a challenge to the global fuel demand, as it is expected to experience significantly diminished expansion during the current year.
In December, the UAE achieved the most substantial reduction in supply, decreasing it by 70,000 barrels per day to reach 3.08 million barrels per day. Despite this cut, the country’s output remained higher than the designated quota for December and even surpassed the upcoming elevated target set to take effect this month. Angola’s oil output took another hit in its last month as an OPEC member, with a decrease of 40,000 barrels daily, down to 1.1 million. In a recent announcement made by Luanda, it disclosed its decision to leave the cartel and cease its 16-year membership starting from January 1. This decision came after a contentious disagreement arose over Angola’s assigned production quota.
Many back and forth were recorded in the sector.
Despite OPEC’s leaders imposing a lower quota, the West African country stood firm in its refusal to comply. Nevertheless, its December production, which had suffered from neglect and insufficient investment over the years, remained at the same level as the previously rejected limit. Many crude traders doubt that the new supply restrictions implemented by the 22-nation OPEC+ alliance this month will be fully implemented, given that several members have already reached their production limits, resulting in significant revenue losses. According to the International Energy Agency (IEA), the projected cutback is estimated to result in an actual reduction of approximately 500,000 barrels per day.
To achieve its goal for January, Iraq must decrease its daily production by a significant 290,000 barrels. This is essential due to Iraq’s inconsistent performance in implementation and urgency for export revenue. The OPEC organization will assess market conditions through an online monitoring meeting on February 1. Furthermore, ministers are set to convene in June at the group’s Vienna headquarters for an in-person gathering. Goldman Sachs has foreseen a potential doubling of oil prices in the event that ongoing attacks on commercial shipping by Houthi rebels persist. This unsettling trend, occurring over 20 times since November, has led to a concerning projection by the financial firm.
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According to Daan Struyven, the head of the oil research division at the company, in an interview with CNBC, a prolonged disruption in the Red Sea could result in a significant increase of three to four dollars in oil prices. Struyven asserted that a 20% surge in prices would occur if the Strait of Hormuz faced a month-long disruption and that the prices might even double if the disruption continued. This is also a growing concern by various players in global business and politics. David Cameron, the ex-Prime Minister currently serving as Foreign Secretary, expressed his firm belief during a Sky News interview that the relentless attacks must cease. His statement emphasized that this matter transcends mere British concerns; it is of utmost global importance.
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