OPEC+ to implement voluntary oil production cuts in 2024, further strangling the global energy supply

After days of intense negotiations and delays caused by disputes over production baselines, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, have reached an agreement to implement voluntary oil production cuts.

The meeting, originally scheduled to take place in person in Vienna, Austria from Nov. 25 to 26, was delayed due to disputes over the baseline production of the group’s largest West African members, namely Nigeria and Angola.

OPEC has set the quota for Nigeria to be cut to 1.5 million barrels per day, far from their proposal of 1.78 million barrels per day. In Angola in Southern Africa, the continent’s second-largest producer of crude oil, OPEC has given it a 2024 output target of 1.11 million barrels per day. In the Congo, the organization provided a target of 277,000 barrels per day.

These numbers are considerably lower than what was agreed upon in June when OPEC+ members agreed to a complex deal that adjusted production targets for several countries.

Furthermore, both Angola and Nigeria are planning to go against OPEC’s wishes and produce more oil than their quotas. Angola plans to pump 1.18 million barrels per day beginning in January, slightly higher than its quota. Meanwhile, Nigeria, which has seen a decline in oil output for years but has experienced a recent uptick in production due to increased offshore activity, is facing criticism for its ambitious target of producing two million barrels of crude and condensate per day in 2024.

Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman are also expected to cut production by a total of 2.2 million barrels per day beginning in January and until the end of March 2024. Russia is also cutting its oil production by about 300,000 barrels per day and petroleum by 200,000 barrels per day.

Saudi Arabia, the world’s leading crude oil exporter, will extend its voluntary production cut of one million barrels per day until the end of March 2024. (Related: Saudi Arabia to extend its voluntary oil production cut until September.)

These latest production cuts would be on top of those from June, which could lead to higher gasoline prices in 2024. This, in turn, could impact President Joe Biden’s chances of reelection.