The IEA has said supply cuts will affect oil surplus in 2024. This is according to a November 21 Reuters interview citing Toril Bosoni, the head of the International Energy Agency’s oil markets and industry division.
During the ongoing Autumn conference in Oslo, Norway, Bosoni shared insights about the global oil market’s trajectory in 2024, suggesting a potential slight surplus in supply. She said that even if OPEC+ nations prolong their cuts into 2024, the oil market may still experience an excess of supply.
Presently, the oil market finds itself in a deficit, witnessing a rapid decline in stocks. Bosoni highlighted this situation, noting that global oil stocks currently rest at notably low levels.
Such low levels pose the risk of heightened volatility should unexpected events impact either the demand or supply aspects of the market.
Reuters also reported insights from sources linked to OPEC, indicating the group’s contemplation of further oil supply cuts during its next meeting on November 26. This goes beyond the ongoing reductions orchestrated by Saudi Arabia and Russia.
Note that in early November, major oil exporters Saudi Arabia and Russia confirmed they would continue their extra voluntary output cuts until the end of 2023. These reductions are expected to maintain a substantial shortage in the oil market through year-end.
The Oil Market Report Context
In its November 2023 oil market report, the IEA projected a 102.9 million barrels per day demand growth in 2024. The IEA report highlighted that global oil demand is surpassing initial expectations.
Despite a growth rate almost two-thirds lower than the current year, global oil demand is anticipated to reach a record annual high of 102.9 mb/d in 2024. Furthermore, the IEA report cited, mentioned that world oil supply growth is also exceeding initial projections.
It noted further that those concerns about the Israeli-Hamas conflict escalating into a wider regional crisis, disrupting oil supply flows, have not materialized so far. So, unless significant unforeseen disruptions occur, the global oil supply is steadily increasing.
The IEA also noted that the market rally that pushed benchmark oil prices towards triple digits in September 2023 reversed sharply in October 2023, despite continued tight crude supplies and an intensifying conflict in the Middle East.
Note that the OPEC+ alliance, comprising both Saudi Arabia and Russia, is currently pumping 900 thousand barrels per day (kb/d) below the demand for their crude oil.
Meanwhile, in Q3/2023, IEA says that global crude oil inventories took a massive dip, plummeting by 140 million barrels to reach a new low.
This drop was primarily due to refineries increasing their activity before seasonal maintenance. However, the pace of demand growth is anticipated to slow down, potentially leading the market into a surplus as we head into 2024.
Where does Nigeria factor into in all these?
In 2024, Nigeria may find itself producing less than its current 1.78 million barrels per day production quota. In June 2023, Nigeria was given before November 2023 to significantly increase its crude oil production.
Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) clearly shows that the country has not yet significantly increased its oil production, the highest rate being 1.57 million barrels per day in September 2023 (with the addition of condensate production figures).