Nigeria, others maximise output cut grace to stabilise
Nigeria and other Organisation of Petroleum Exporting Countries (OPEC) allies may not get new output cuts till June following the rescheduling of an April meeting by the cartel.
The organisation’s monthly oil market report showed that inventories as of January were 2.88 billion barrels, about 19.1 million barrels above the five-year average the coalition is targeting.
OPEC and 10 non-OPEC allies, led by Russia, are in the third year of collective production cuts aimed at supporting oil prices, with the most recent round of curbs agreed in December to run through June.
Indeed, increased production by Nigeria and Iraq above the agreed quota by members of the cartel in February saw compliance level hitting 79 per cent last month, three per cent above January’s 76 per cent.
Data showed that the 24-nation OPEC/non-OPEC alliance achieved 86 per cent conformity in February with their agreed 1.2 million bpd in output cuts.
More than any other country, Nigeria needs the oil price to rise and in the worst case, remain steady at any price above the $60 benchmark of the 2019 budget.
But yesterday, oil prices were slightly up but continued to hover around $67 a barrel as the market assesses the news that a panel of the OPEC and allies is recommending that partners cancel a scheduled extraordinary meeting in mid-April.
However, an S&P Global Platts survey said Saudi Arabia’s continued output discipline and Venezuela’s struggles under U.S. sanctions resulted in output modestly lowering to 30.80 million bpd in February.
According to the rating body, the West African giant, which was exempted from the previous deal but agreed to a quota under the current accord, pumped 1.88 million bpd in the month under review, 190,000 bpd above its cap.
President Muhammadu Buhari had last month said that the country could consider a reduction in crude production in support of efforts to shore up the price of the commodity.
He was quoted in a statement by his Senior Special Assistant on Media and Publicity, Garba Shehu, that “Nigeria as a responsible member of OPEC was willing to go along with the Saudi initiative in limiting output so that prices would go up.”
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