Nigeria, Angola miss out on OPEC quota increases

OPEC+ has announced an increase in output by 648,000 barrels per day in July and August, but Nigeria and Angola may not be beneficiaries.

This is despite OPEC+ dividing the increases proportionally among members,

At present quota, the two oil producers, including Russia have been unable to meet their targets, Russia because of the war in Ukraine.

Nigeria is unable to reap bountifully from rising oil prices and the increase quota because of massive oil theft and sabotage of oil pipelines.

Not surprisingly the oil markets shrugged off the decision of OPEC+ to increase production and questioned whether the incremental output would make up for lost Russian supply and meet China’s growing demand amid easing COVID restrictions.

U.S. West Texas Intermediate (WTI) crude futures gained 7 cents to $116.94 a barrel at 0640 GMT, while Brent crude futures were up 18 cents at $117.79 a barrel.

“The fact that Russia was left in the group suggests that production from the alliance will continue to struggle to meet even this modest increase in quota rises,” ANZ Research analysts said in a note.

Russian output has already dropped by 1 million bpd since its invasion of Ukraine, which Moscow calls a “special military operation”, and is likely to fall even further as the European Union’s ban on Russian oil kicks in, ANZ analysts said.

“To put it another way, traders think the incremental increase is too small relative to the growing downside supply risks from the EU embargo amid an expected increased demand from China,” said SPI Asset Management Managing Partner Stephen Innes.

With daily COVID-19 cases falling, China’s financial hub Shanghai and capital, Beijing, have relaxed COVID-19 restrictions this week.

The central Chinese government vowed broad support to stimulate the country’s economy, which is expected to target high fuel intensity sectors such as infrastructure and property construction.

Analysts warned, though, of downside risks to oil demand and prices, as Beijing has not changed its stance on COVID-19 rules.

“China’s re-opening from COVID lockdowns is positive for demand for now but the country retains a zero-COVID policy so snap lockdowns can quickly erode this impact,” analysts from National Australia Bank said in a note.

Although Brent was on track to fall for the week, WTI was on course for its sixth weekly gain as U.S. supply is seen as very tight, prompting talk of fuel export curbs or a windfall profits tax on oil and gas producers. read more

Government data on Thursday showed U.S. crude stockpiles fell much more than expected in the week to May 27 and gasoline inventories fell, defying expectations for an increase.