At the meeting, OPEC+ noted that chronic underinvestment into the upstream sector will continually impact the availability of adequate supply to meet growing demand beyond 2023. Notably, OECD commercial stock stood at 2.7bn bbl. in Jun-2022, 6.0% lower than Jun-2021 and 8.7% below the 5-year average (2.9bn bbl.) as emergency oil stocks have reached the lowest in 30 years. Although the major market participants had pushed for a much larger increase in oil output as higher energy prices weighed on consumers, however, member countries have noted that the gap between oil supply and demand is narrowing, attributing rising oil prices to panic buying on the part of market participants amid fears of a global recession. Noteworthily, OPEC+ highlighted that members’ conformity to the Declaration of Cooperation has averaged 103.0% since May 2020, signalling voluntary contributions of participating countries.

Going forward, our outlook for global oil prices remains bright as we expect oil prices to continue its bullish run in the short term. In the long-run, fears of economic recession and rising inflationary pressures in Europe and the US is expected to dampen demand. For Nigeria, the increased OPEC+ agreement output expansion means that our quota for the month increases to 1.830mbpd in September, although fiscal (reduced CAPEX allocation) and structural (oil theft and pipeline vandalism) constraints will mean that the NNPC and its JVs will struggle to meet this quota.