Last Thursday, OPEC+ ministers met for their 27th OPEC and non-OPEC Ministerial Meeting amid tensions in Russia and Ukraine and rising energy prices. OPEC + agreed to stick to its existing agreement of a 5% output increase, continuing its firm stance on output held since Dec-2020. At the meeting, OPEC+ agreed to ease cuts by 432,000 Bpd In May. After the meeting on Thursday, the US announced it would be releasing 1mbpd for the next six months to ease supply constraints. On Thursday, Brent oil futures declined by 4.9% to close at $107.9/bbl. (previously Wednesday 30-Mar, $113.5/bbl.).

At the meeting, OPEC held firm as it had in previous months and ignored calls from several other countries—including the United States—to boost production as higher energy prices weighed on consumers. It highlighted that the oil market remained “a well-balanced market” and that recent volatility in prices was not caused by fundamentals but by ongoing geopolitical developments. Following OPEC+’s announcement, the Biden administration revealed that it would release 180mbpd crude oil to calm oil prices. 

Going forward, we remain bullish on oil prices, especially as OPEC+ (Russia included) cartel looks increasingly comfortable doing business together with current market fundamentals. Major high output producers within OPEC, such as Saudi and UAE, have opted not to cover supply shortages. Other market players, such as shale producers, which would have been a threat at higher prices, seem focused on shareholder growth instead of a grab for market share, a strategy adopted since the pandemic. For Nigeria, new the increased OPEC agreement output expansion means that our quota for the month increases to 1.7mbpd for May, although fiscal, operational, and structural constraints will mean that the NNPC and its JVs will struggle to meet this quota.