Nigeria has tendered request for further exemption from the production cut at the ongoing 172nd meeting of the Organisation of Petroleum Exporting Countries (OPEC) meeting today. Minister of State for Petroleum Resources, Ibe Kachikwu told journalists at the pre-meeting interview that the country is yet to revive its production level, therefore is pushing for extension of the exemption at the meeting.
"We are going to push for extension of the exemption because we are not yet back for our full production, we expect the cut to be extended by nine months and we expect by then to put our infrastructure ready, fix our pipelines and once we do that we will be willing to participate." Kachikwu said The OPEC ministers of energy are currently holding a meeting to decide on possible extension of the production cut by six or nine months, starting from June.
The first production cut deal was adopted in November, 2016 and effected in January 2017 which reduced the total output of member-countries by about 1.2 million barrels per day and about 60000 barrels by non-OPEC members. The OPEC Secretary General Mohammed Sanusi Barkindo yesterday described the compliance of the agreement as successful. He said compliance level for the month of April was 102 percent by both the groups, above the 98percent for March.
Since the decision by the two groups to cut production in order to rebalance the market, oil prices jumped from about $44/barrel to over $50/ barrels and for the last six months it's hovering around $48 to $54 per barrel. However in the early morning trading, the oil price dropped by about $2/b in London. It had been close to $52.0 a barrel but dropped to around $50.8 a barrel shortly after oil ministers began meeting.
Khalid A. Al-Falih, Saudi Arabia's Minister of Energy, Industry and Mineral Resources, and President of the OPEC Conference said yesterday that "Since our last meeting in November, the oil market situation has markedly improved. We started with a bearish sentiment, but the market is now well on its way toward rebalancing. We have more work to do in lowering inventories toward the last five-year average, but we are on the right track."
According to him, stakeholders across the spectrum are benefitting from the improved situation-not only the producers who are part of the supply agreement but other countries as well. IOCs are also posting their best quarterly earnings in two years. "Investment flows into the upstream sector have picked up, albeit at a slower pace than required to meet forecast long-term demand. And despite potential volatility, I expect the situation to continue improving, assisted by a more robust global economy and higher GDP growth in 2017, as well as fairly healthy oil demand growth this year," he said.