Oil Heads for Monthly Loss on Returned Hostages and Potential OPEC Compromise

by Ship & Bunker News Team
Friday November 24, 2023

On the questionable strength that Hamas releasing some hostages in its war with Israel would lessen the geopolitical risk premium, oil prices on Friday experienced  another modest decline.

Brent settled down 84 cents at $80.58 per barrel, while West Texas Intermediate settled down $1.56 to $75.54.

The two benchmarks achieved their first weekly gains in over a month but were on course for a second consecutive monthly loss, with prices down about 20 percent from a high in late September.

Also on Friday, three sources from the Organization of Petroleum Exporting Countries (OPEC) told media that they were moving towards a compromise with African oil producers Nigeria and Angola who want to boost output, contrary to the cartel's intention to deepen output cuts in 2024.

When OPEC meets on November 30 it is expected that an extension of existing cuts rather than an initially hoped for deepening of cuts will be agreed upon.

Curiously, Nigeria's governor to OPEC told media that he was not aware of any disagreement with other OPEC regarding his country's production targets; Nigeria's daily average output was 1.4 million barrels per day (bpd) in the three months to September, up from 1.2 million bpd in the same period last year.

As for Angola, OPEC governor Estevao Pedro told Reuters that "We are fighting to increase our production" and added that investment was being made accordingly.

Commerzbank analysts including Barbara Lambrecht wrote in a note that "The oil price will probably tread water for the most part ahead of the meeting," and Saudi Arabia "still appears willing to shoulder the lion's share of the supply cut needed to stabilize the oil market."

For its part, Standard Chartered noted that a key question for 2024 how much the production targets for other OPEC members will be reduced after the Saudis' voluntary cuts play out and suggested that the members might not lower their targets at all, due to oil prices being -supported by strong fundamentals and sentiment.