By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, to which Nigeria belongs, agreed on Sunday to extend a voluntary production cut of 2.2 million barrels of crude oil a day into 2025.
The cuts, first agreed last December, were due to expire at the end of this month. They came on top of the previously agreed cut of 3.66 million barrels per day announced in 2022 and 2023 as the group — led by Saudi Arabia and Russia — tried to counter slowing demand and rising output from the United States.
The group also released its 2025 production requirements for member and nonmember countries, which were essentially the same as this year’s.
The uptick “will be phased in gradually” from January through September 2025, the group said.
Despite the OPEC+ cuts amid ongoing tensions in the Middle East, global oil prices have fallen by about 10 per cent since hitting a five-month high in early April.
The price of Brent crude, the global oil benchmark for which Nigeria prices its headline crude, traded at $82 a barrel on Friday, down from $91 in early April when a suspected Israeli airstrike on Iran’s embassy in Syria sent tensions through the oil markets.
OPEC+ members are currently cutting output by a total of 5.86 million barrels per day or about 5.7 per cent of global demand.
Those include the 3.66 million barrels per day of cuts, which were due to expire at the end of 2024, and voluntary cuts by eight members of 2.2 million barrels per day, expiring at the end of June 2024.
After the meeting, OPEC+ said it will gradually phase out the cuts of 2.2 million barrels per day over a year from October 2024 to September 2025.
OPEC expects demand for OPEC+ nations to average 43.65 million barrels per day in the second half of 2024, implying a stock drawdown of 2.63 million barrels per day if the group maintains output at April’s rate of 41.02 million barrels per day.
The drawdown will be less when OPEC+ starts phasing out the 2.2 million barrels per day voluntary cuts in October.
Meanwhile, the International Energy Agency (IEA), which represents top global consumers, estimates that demand for OPEC+ oil plus stocks will average much lower levels of 41.9 million barrels per day in 2024.
