You see, part of the reasons oil price is going up gradually is because oil producing countries agreed at some point to reduce the quantity of oil that they produce.

This forced quantity of supply to reduce, thereby increasing the value of available supply. Just a simple law of demand and supply was applied.

However, some countries such as Nigeria and Libya whose oil production capacity were affected by attacks on its pipelines were exempted from participating in the output cuts.

It was also agreed that Nigeria will join the cuts when attacks on its facilities stopped and production volume rises, at least by March when the recent output cuts end.

But even though that seems to be the reality now, Nigeria is very unlikely to join the Organisation of Petroleum Exporting Countries, OPEC’s cuts in oil production after March.

Also Read:Why UK May Not Need Nigeria’s Crude By 2040

Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, told reporters in Abuja on Wednesday that, “it is very unlikely that I see stability that convinces me with certainty that I should exit the exemption between now and March".

He also said an extension to the cartel’s cuts was possible since volumes of oil stocks were still a challenge.

“I will not be surprised if an extension to the cuts is contemplated post-March, given the sort of volumes I‘m still seeing, because as long as the volumes are still a challenge, we will continue to do everything that we need to do to tighten up the market,” Kachikwu added.

Nigeria’s oil production currently stands at 1.6 million barrels per day, (bpd) as against targeted 2 million bpd.

Also watch: