OPEC Cuts Exemption: The Party May Be Over For Nigeria
The oil producer’s cartel, the Organisation of Petroleum Exporting Countries, OPEC is meeting on Thursday.
Top of the agenda of the meeting will be oil production cuts which have been the at the heart of the price recovery over the past two years.
You may recall that when the OPEC entered the production cut agreements, Nigeria and Libya were exempted due to the crisis in the two countries.
But the two countries have seen some relative stability over this period and have as a result also seen increased and stable crude production.
The production cuts that the two countries enjoyed may have to come to an end as other members of the group have expressed their eagerness to rescind their support.
The production cuts started in January 2017 to end by March 2018 but was later extended till the end of the year.
OPEC’s main advisory board said last month that the group needed to cut oil production to avoid an oversupplied market in 2019.
Earlier in November, OPEC secretariat said in a report that the group needed to pump 1.36 million barrels per day less next year than it did in October to avoid flooding the oil market in 2019.
Delegates attending the OPEC meeting in Vienna told S&P Global Platts on Wednesday that they would be asking Nigeria and Libya to accept a production cut quota if OPEC could reach a new supply accord.
“We are hopeful that they will come around this time and understand that everyone has to cut together,” an OPEC delegate was quoted as saying, asking not to be named because of the sensitivity of the discussions.
The delegate added that both countries had made significant improvements to their production since the current deal went into force in January 2017, and it was time for them to “contribute.”
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