The prices of crude oil fell more than 2 per cent on Wednesday.
Brent crude oil futures were down $2.02, or 2.22 per cent, to $88.90 a barrel at 1228 GMT, while U.S. West Texas Intermediate crude (WTI) fell $2.10, or 2.35 per cent, to $87.13 per barrel, Reuters reported.
This comes, according to the news agency, amid crude oil cut by Saudi Arabia and Russia which is to continue till the end of the year and demand fears stemming from macroeconomic headwinds.
The demand fears driven by macroeconomic headwinds continue to mount pressure on the oil prices, the report says.
It quoted Investec analyst Callum Macpherson as saying, “Market attention has shifted from the focus on the short-term tightness to the implications of interest rates staying higher for longer, the subdued macro environment that entails, and how OPEC+ plans to deal with that when it meets on 26th November.”
OPEC and its allies had, in October last year, agreed to cut oil output by 2 million barrels per day in November, the deepest cut by OPEC+ since the 2020 COVID pandemic.
The decision came despite pressure from the United States and others advocating that the group increase its output.
In April, OPEC said it would start “a voluntary reduction” of 1.66 million barrels per day in its production of crude oil alongside other members of OPEC.
The cuts were to start in May and last through the end of the year, an official with the Saudi Ministry of Energy was quoted as saying by the Saudi state-run news agency, SPA.
The cut is in addition to the reduction announced by OPEC+ in October 2022, according to SPA.
In June, OPEC said it would extend the cut until 2024.
It noted that the decision was taken in light of the continued commitment of the OPEC and non-OPEC Participating Countries in the Declaration of Cooperation (DoC) to achieve and sustain a stable oil market and to provide long-term guidance for the market.
On Wednesday OPEC+ Joint Ministerial Monitoring Committee (JMMC), kept the group’s output policy unchanged.
In a statement released by the organisation on Wednesday after its 50th JMMC meeting, the world petroleum body said: “The JMMC reviewed the crude oil production data for July and August 2023 and noted the overall conformity for participating OPEC and non-OPEC countries of the Declaration of Cooperation (DoC).
“The committee urged all participating countries to achieve full conformity and adhere to the compensation mechanism.
“The committee reaffirmed the commitment of its member countries to the DoC which extends to the end of 2024 as agreed in the 35th OPEC and non-OPEC Ministerial Meeting (ONOMM) on 4th of June 2023,” it said.
The committee said it would continue to closely assess market conditions noting the willingness of the DoC countries to address market developments and stand ready to take additional measures at any time, building on the strong cohesion of OPEC and participating non-OPEC oil-producing countries.
The committee also expressed its full recognition and support for the efforts of the Kingdom of Saudi Arabia aimed at supporting the stability of the oil market and reiterated its appreciation for the Kingdom’s additional voluntary cut of 1 million barrels per day and for extending it till the end of December 2023.
The committee also acknowledged the Russian Federation for extending its additional voluntary reduction of exports by 300 kbd till the end of December 2023.
The fall raises more concerns for Nigeria at a time the country faces severe revenue problems, pipeline vandalism and crude oil theft in its oil-producing region.
Earlier in September, the Speaker of the House of Representatives, Tajudeen Abbas, said Nigeria lost N16.25 trillion to crude oil theft between 2009 and 2020.
He said the menace of crude oil theft had hampered the growth of the country’s oil production, with between 5 and 30 per cent of crude oil production lost daily.