Financial Energy Review
by Abisoye Shola……….
As OPEC holds it’s technical meeting today to discuss among other things the relaxing of production cuts across it’s member countries, pressure may be mounted on Nigeria to comply with the agreed production cuts to be announced after the meeting.
Though predictions by traders are that the cut will be from 9.2 million barrels per day to 7.7 million barrels per day. This means more barrels for the market.
This anticipated extra supply has already started distorting the oil price Brent Crude lost about 0.62 percent to trade at $42.94 a barrel, on Monday and also the American benchmark for crude, WTI, lost about 0.72 percent to trade at $40.26 same day.
One of the reasons some OPEC members are strongly pushing for more barrels to the market is because non OPEC+ members are taking advantage of the cut to gain more market share.
However, OPEC is said to be more worried with member countries that are not complying according to directives and OPEC may today at the meeting consider some form of sanctions to erring members.
Angola and Nigeria are under more pressure from OPEC+ and Saudi Arabia in particular to properly comply with agreed global cuts.
Meanwhile Nigeria will be holding its monthly production curtailment meeting this week to allocate September cargoes. It is expected that her September programme will be compliance with what OPEC expects.
This is because the federal government had before now expressed its readiness to abide by the resolutions reached by the OPEC+ to comply with output cuts.
Nigeria had admittednot being able to meet its own quota of the output cut, with the Minister of State for Petroleum Resources, Mr Timipre Sylva, agreeing that the country could only partially comply with the agreement to the tune of about 52 per cent.
The oil cartel, led by Saudi Arabia, however, pressured defaulting countries, including Iraq, Nigeria, Angola, Kazakhstan, who have now agreed to compensate for their inability to meet their quota by making deeper cuts in three months.
Sylva, in a statement had pointed out that Nigeria has resolved to cooperate fully with the decisions of OPEC+. While commending the leadership shown by Saudi Arabia and Russia, Sylva stressed the need to work jointly to slowly stabilise the international oil market, which has been badly impacted by the COVID-19 pandemic as well as the initial price war between Russia and Saudi Arabia.
“Nigeria will continue collaborating with other OPEC+ nations in the historic efforts to adjust crude oil production towards rebalancing and stabilising the global crude oil market for the benefit of all” he said.
