At the 34^th joint ministerial meeting of the Organisation of Petroleum Exporting Countries (OPEC), OPEC and non-OPEC members agreed to maintain their output policy established on 05-Oct, keeping production levels at 41.9mb/d. This decision comes in the face of an agreed $60.0/bbl. price cap on Russian oil by member countries of the G7, and an EU ban on Russian seaborne crude which came into effect on 05-Dec. The decision also comes in the midst of weakening global economic fundamentals, despite China’s easing of COVID restrictions.
 
At the meeting, the participating countries reiterated their readiness to meet spontaneously to take immediate additional measures to address market developments and support the balance of the oil market and its stability if necessary. Participants further endorsed the decisions from prior ministerial meetings, including the adjustment of the frequency of the monthly meetings to become every two months for the Joint Ministerial Monitoring Committee (JMMC), and the authority of the JMMC to hold or request a ministerial meeting at any time to address market developments if necessary. Also, the meeting reiterated the critical importance of adhering to full conformity and compensation mechanism
 
Looking forward, the outlook for global oil prices is mildly bullish in the short to medium term. Crude oil prices are set to rise as reopening of Chinese cities and relaxation of the regime’s zero-Covid policy continues, ushering a rebound in oil demand. This drive, alongside OPEC+’s decision to retain production caps- and the G7’s price cap on Russian oil will push oil prices northward. That said, we expect the impact of the G7’s price cap on Russian oil to be felt in few months as many countries have stockpiled in expectation. In addition, the price cap may have minimal effect given market sources indicate Russia already sold its crude at $63.0/bbl before the price cap was announced. 

For Nigeria, we project an average crude oil production of c.1.3mbpd (including condensates) in Q4-2022, up from 1.2mbpd in Q3-2022 but below her 1.8mbpd OPEC quota (ex-condensates).  The drive to uncover illegal pipelines will support crude oil output. Nonetheless, we expect the oil sector to decline in Q4-2022. The 35^th OPEC+ ministerial meeting is set to hold on 04-Jun-2023.