Global oil supply and demand has seen significant fluctuations since the onset of the COVID-19 pandemic and subsequent lockdown restrictions. As economies begin to gradually reopen, demand for the resource has seen an upward trend, which, coupled with low wind levels and the ongoing gas crisis in Europe, has led to a significant price hike across the world as countries scramble for supply. As of Monday the 1st of November 2021, crude futures rose 70 cents to $84.42 a barrel, leading to western nations calling for an increase in production to mitigate rising prices and drive a strong economic recovery.
In light of this, the African Energy Chamber (AEC), as the voice of the African energy sector, urges the Organization of the Petroleum Exporting Countries (OPEC) member countries to maintain production levels and not react prematurely ahead of pivotal meetings to be held in November. Rather, by working together, OPEC member countries can ensure a mutually beneficial outcome in the face of price increases.
The African continent has seen significant impacts from the COVID-19 pandemic, with the health crisis redirecting capital expenditure and leaving depleted government budgets requiring replenishment. As demand for oil increases globally, OPEC member countries and major producers in Africa stand to benefit. Ahead of the 22nd OPEC and non-OPEC Ministerial meeting – to be held on the 4th of November 2021 – and African Energy Week (AEW) 2021 – to be held on the 9th-12th of November – the AEC urges producing nations to work collaboratively, particularly as policymakers and organizational leaders move to ensure producing nations capitalize on revenue while global demand is met.
“Africa needs its oil revenues to accelerate a post-COVID-19 recovery, now more than ever. In the face of increasing prices due to demand rebound, the continent needs to pursue a cooperative approach to ensure resources are monetized while demand is met. Instead of rapidly increasing production, OPEC member nations need to carefully and collaboratively navigate the challenging post-COVID context,” stated NJ Ayuk Executive Chairman of the AEC.
OPEC member countries have already committed to gradually increasing production. Despite western calls for an even higher increase, the current OPEC production plan of an approximately 400,000 barrel per day increase is likely to be the outcome of the November 4th meeting. By maintaining production plans, African oil producers serve to benefit, creating the opportunity for an accelerated post-COVID-19 recovery across the continent.
AEW 2021, in partnership with South Africa’s Department of Mineral Resources and Energy DMRE, is the AEC’s annual conference, exhibition and networking event. AEW 2021 unites African energy stakeholders with investors and international partners to drive industry growth and development and promote Africa as the destination for energy investments.