SUPERNEWS

Macro

OPEC Eyes Namibia's Oil, Potential Cartel Membership Hinted

OPEC supports Namibia's emerging oil sector, highlighting its role in meeting global demand projected to reach 116 million barrels a day by 2045.

By Athena Xu

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4/24, 06:35 EDT
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TotalEnergies SE
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Key Takeaway

  • OPEC pledges support to boost Namibia's crude production, hinting at potential cartel membership if offshore finds by TotalEnergies SE, Shell Plc, and Galp Energia are significant.
  • Namibia's oil sector is positioned as crucial for meeting global demand projected to reach 116 million barrels a day by 2045.
  • OPEC encourages investment in Namibia, highlighting the country's emerging role in the global energy landscape.

Namibia's Oil Potential Unveiled

The Organization of Petroleum Exporting Countries (OPEC) has expressed its support for Namibia, aiming to transform the southern African nation into a significant crude producer. OPEC Secretary-General Haitham Al Ghais, in a pre-recorded message, emphasized the potential benefits of the Namibia-OPEC partnership. With TotalEnergies SE, Shell Plc, and Galp Energia SGPS SA making multiple offshore discoveries, Namibia considers joining OPEC, contingent on the significance of these finds. Al Ghais projected that global oil demand would reach 116 million barrels a day by 2045, highlighting Namibia's critical role in meeting this future demand.

Commodities and Economic Growth

Jeff Currie, a veteran analyst, predicts a commodities boom, with oil prices potentially surpassing $100 a barrel amid strong economic growth and demand. Despite high interest rates, which usually curb inflation, Currie views this as a positive sign of robust demand underpinning the commodities market. The strategic control of crude markets by Gulf-based OPEC producers, particularly Saudi Arabia and the UAE, due to their spare production capacity, plays a pivotal role in this scenario.

Geopolitical Influences on Markets

Geopolitical tensions significantly impact commodity prices, with OPEC's decisions historically affecting oil markets. McAlinden Research Partners point out the geopolitical risks from countries like Russia and Saudi Arabia, which could escalate commodity prices. However, they also note the rational behavior of state actors in mitigating worst-case scenarios. The complex economic backdrop, including discussions on inflation and employment figures, suggests potential for a recession, further complicating the commodities market landscape.

Election Impacts and Policy Directions

The 2024 election could have profound implications for commodities, particularly oil, depending on the policies of the winning candidate. McAlinden Research contrasts the Biden administration's climate change focus with Trump's pro-drilling stance, indicating divergent paths for oil production and prices. Additionally, the US dollar's strength and the Federal Reserve's monetary policy are crucial factors influencing commodity prices, with a weaker dollar generally benefiting commodities.

Management Quotes

  • Haitham Al Ghais, OPEC Secretary-General:

    "We are excited about the potential of the Namibia-OPEC partnership and stand ready to offer support at this crucial juncture... Global oil demand will grow to 116 million barrels a day by 2045 and “Namibia oil and energy will be essential in meeting future demand. We encourage potential investors to look at Namibia and the abundance of possibilities here.”