• Thursday, February 29, 2024
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Oil price dips as OPEC+ approves cuts by 432,000 bpd in May

Nigeria’s oil rig falls first time in 8 months as production dips

Oil price has dropped further after the Organization of Petroleum Exporting Countries and its Allies (OPEC+) agreed in a meeting Thursday to increase the group’s output by 432,000 barrels per day beginning in May.

This was 32,000 bpd higher than the originally agreed-upon 400,000 bpd due to five of its members shifting baselines.

Brent crude, the international benchmark against which Nigeria is measured, has fallen by $4.80 to $108.7 per barrel as of 03:37pm Nigerian Time, while West Texas Intermediate (WTI) has also dropped by $3.57 to $104.23 barrels per day.

Saudi Arabia’s production quota has been increased to 10.549 million bpd, while Russia’s quota has also been increased by the same amount. The UAE has a quota of 3.04 million bpd, Kuwait has a quota of 2,694, and Iraq has a quota of 4.461 million bpd.

The agreement largely meets market expectations. The Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) meeting of OPEC lasted less than 20 minutes and agreed on a recommendation to OPEC+ that the production increase to 432.000.

Read also: Western countries consider tapping stockpiles to push down oil prices

The OPEC+ meeting began immediately after, lasting only 12 minutes, signalling the group’s strong unity in its production strategy.

Some speculated that the bold “leak” from the White House late Wednesday stating that the Biden team could release a million barrels of crude oil per day from the United States Strategic Petroleum Reserves would be enough to persuade OPEC+ to change its plans.

OPEC+ has ignored calls from a number of other countries, including the United States, to increase production by more than planned, as high gasoline prices have a significant impact on consumers.

For months, the Biden Administration has been looking for a solution to its problem of high retail gasoline prices, claiming that all options to reduce them are on the table.

A large-scale release of Strategic Petroleum Reserve (SPR) inventory could indicate that those options, including potential deals with Venezuela and Iran, have been exhausted.

One of the last lingering hopes for lowering those prices was OPEC+ increasing its output more than planned.

The next OPEC+ meeting to agree on the June plan is scheduled for May 5.