…Nigeria fails to comply with global output reduction
The Organisation of Petroleum Exporting Countries (OPEC) has canceled a meeting scheduled for today, due to member countries, Nigeria inclusive who have failed to conform with production cut agreements.
The global petroleum governing body and its allies were known as (OPEC+) have agreed on Thursday, April 9, 2020, OPEC to slash global crude oil production by a record 10 million barrels per day, or about 10 per cent of global output, in May and June.
The notion was to boost prices battered by plunging demand due to coronavirus induced lockdown measures.
Imagine if every member supplied crude oil to the global market in line with their capacities, there will be a surplus and a further crash in the price of the product.
However, while some OPEC members like Saudi Arabia, Kuwait, and the United Arab Emirates voluntarily adhered to output cuts of 1.180 million bpd, other members like “Iraq, Kazakhstan, and Nigeria showed weak compliance with their output reduction targets in May, Reuters reports.
The proposal was for OPEC members to cut global quantity by up to 10 million barrels per day between May and June 2020, 8 million barrels per day between July and December 2020, and 6 million barrels per day from January 2021 to April 2022, respectively.
Nigeria, which produces 1.829 million barrels per day, was asked to produce 1.412 million barrels per day, 1.495 million barrels per day, and 1.579 million barrels per day respectively for the corresponding periods, according to the agreement.
A source from OPEC according to Reuters said “I don’t think there will be a meeting on Thursday. There are still many challenges.”
There are speculations that if OPEC meetings hold in the coming days, the deliberations will be about specifying new criteria for countries like Nigeria who have defaulted in compliance with the oil cuts; and how they can compensate for their overproduction in the coming months.
Oil prices in the international market have risen from the doldrums experienced in April, basically due to the easing of lockdown constraints across the world and the OPEC supply cut agreement.
Get real time update about this post categories directly on your device, subscribe now.