During the 2022 edition of Africa Energy Week (AEW) – taking place this week in Cape Town – African energy ministers emphasized that the decision made by the Organization of Petroleum Exporting Countries (OPEC) and its allies to cut oil production was not a political one, or a decision in which African ministers were forced to comply with, but rather the decision was based on technical data and fully supported by all members.
Speaking during a panel discussion on global energy security and moderated by African Energy Chamber Executive Chairman, NJ Ayuk, Equatorial Guinea’s Minister of Mines and Hydrocarbons, H.E. Gabriel Mbaga Obiang Lima, and South Sudan’s Minister of Petroleum, Hon. Puot Kang Chol, reiterated that the decision to cut production by two million barrels during the Ministerial Meeting earlier this month was supported by each and every member of OPEC+.
“If OPEC decides to have a meeting and decide something, it is not something that is up for debate by others. We were not forced to agree to production cuts. Each country entered OPEC willingly. We were not forced by anyone: we did it purposefully,” stated Hon. Chol, adding that, “It was not a political decision but a technical agreement, and therefore, should only be addressed technically and not politically.”
Citing concerns over an impending global recession and ongoing market instability, OPEC+’s decision to cut oil production aims to stabilize the market and ensure more consistency between the physical and paper markets. Yet, following OPEC’s decision, accusations that the move to cut production was based on political drivers began to surface, with the international community – the U.S. in particular – accusing the organization of bowing to Russia’s agenda.
However, as H.E. Lima stated during the panel discussion, “The decision at OPEC was not political. What the consumers and producers want is stability of pricing and demand. If you look at the price for consumers, the price has not gone down: it has been maintained.”
Over the last two years, the global oil market has seen the highest fluctuation in decades, with COVID-19 and ongoing geopolitical tensions causing prices to skyrocket, supply to be short and countries worldwide seeking more stability. At the beginning of 2022, oil prices reached the highest in years, measuring upwards of $130 per barrel – compared to 2020 lows of just short of $40 per barrel. For consumers, this has caused significant stress, with prices changing significantly and fuel being in short supply. As such, OPEC has prioritized market stability, with the production cuts expected to help meet this objective.
As H.E. Haitham Al Ghais, Secretary General of OPEC, stated during his keynote presentation at AEW 2022, “The producers of the declaration of cooperation remain a vital stabilizing force despite being in a period of great uncertainty. The last meeting was held a few days ago and the heads of delegations unanimously decided to take a proactive stance to create stability in global markets. With the very real potential of a global recession, there was a consensus among the ministers. I would like to thank the African heads of delegations for their ongoing support to provide lasting stability in global oil markets,” adding that, “Our efforts at the declaration of cooperation aim to provide stable oil markets.”
As such, the panel discussion as well as H.E. Al Ghais’ keynote address made clear the intent of both OPEC member and non-member countries, and with market stability at the forefront of the organization’s agenda, a new era of price consistency and consumer satisfaction is in full swing.