Opec+ members reach agreement to extend production cuts into 2024

Negotiations dragged on as some African producers objected to demands that they give up some of their output quotas

Opec+ members reached a deal to extend their production-cuts agreement into 2024, delegates said, without giving further details on the size of the supply curbs. African producers had previously objected to demands that they give up some of their unused output quotas in the interests of a broader deal.

Talks among members of Opec+ were still in progress at the time of going to press after the  Joint Ministerial Monitoring Committee (JMMC) ended without a formal recommendation, according to a delegate. The discussions were centering on productions quotas from which cuts are calculated, with some African nations still objecting to the proposals, delegates said. 

Some officials from the delegations of Angola and Gabon were seen leaving the Opec Secretariat. Inside the building, Opec+ ministers were still negotiating about African members’ quotas, a delegate said. 

Ministers continued to negotiate a way to overcome African members’ reluctance to tweak their quotas, as the meeting of the JMMC carried on. Angola is among those countries holding out and deal hasn’t been reached yet, delegates said.

It’s not surprising that Angola would be opposed to any deal that would see its benchmark production level cut. Even if the change didn’t affect the country’s current output — not a foregone conclusion — it would certainly determine future ones. Angola retains ambitions to reverse recent declines in its oil production capacity and the last thing it will want is a restrictive Opec+ output quota that would undermine its attractiveness to foreign investors.

In the short term, it is planning to boost crude exports in July to their highest since level since October 2020. Although, at 1.24 million barrels a day they still won’t take production levels close to its current target, which stands at 1.455 million barrels a day.

Several new offshore oil fields are due to come into operation in the next year or two, including TotalEnergies’ 30,000 barrel a day Begonia tie-back to Pazflor next year. In the longer term, the country has signed a heads of agreement with TotalEnergies for two offshore exploration blocks in the Kwanza Basin, which lies off the west African nation’s southern coast.