OPEC+ reached an agreement in Vienna that allowed the United Arab Emirates (UAE) to increase its production target by approximately 200,000 barrels per day (bpd) to 3.22 million bpd starting January 2024, resolving tensions that nearly fractured the alliance two years prior.
Saudi Arabia, the group’s largest producer with over 10 million bpd, supported this deal and announced a significant voluntary production cut for July, alongside extending existing OPEC+ cuts of 3.66 million bpd into 2024 to bolster declining oil prices.
The group also raised its overall production target by 1.4 million bpd from January 2024, compared to the current 40.46 million bpd reduction target.
Impact on African Members
The agreement required African members, including Nigeria, Angola, and Congo, to cede unused production quotas to Gulf states like the UAE. Their 2024 quotas were set based on their highest output from November 2022 to April 2023.
Nigeria, Africa’s largest crude oil producer, achieved a peak production of 1.38 million bpd in February 2023 but faces a cap at 10% below its current OPEC quota of 1.74 million bpd through 2024.
Nigeria and Angola expressed discontent, citing operational and investment challenges that limit their ability to meet quotas. To address these concerns, Saudi Arabia offered assurances that quotas could be revised upward if independent reviews confirm recovering production capacity.
Saudi Arabia’s Influence and Threats
Saudi Arabia, the only OPEC+ member with significant spare capacity, leveraged its position to push the deal forward.
The kingdom threatened to reverse voluntary production cuts made by key members in April 2023 if African nations did not agree to the quota reallocation.
This underscored the dominance of major producers like Saudi Arabia and the UAE, led by Energy Ministers Prince Abdulaziz bin Salman and Suhail Al Mazrouei, respectively, over smaller African members.
Nigeria’s Economic Challenges
Nigeria’s oil production slump, exacerbated by last year’s decline and high global fuel prices due to the Russia-Ukraine conflict, has strained its economy.
The Nigerian National Petroleum Corporation (NNPC) owes approximately $2 billion to dealers, as reported in September 2022, due to the closure of refineries and reliance on imported refined products.
This has contributed to a national debt of N77 trillion, with 96% of government revenue servicing debt.
The World Bank noted Nigeria’s revenue-to-GDP ratio of 7% in 2021, one of the lowest globally, emphasizing the need for increased revenue to support economic development through enhanced public spending.
Russia’s Role
Russia, a key OPEC+ member, avoided additional production cuts in 2023 despite maintaining high output amid Western sanctions over the Ukraine war, further highlighting the uneven burden placed on African members like Nigeria and Angola.
