HomeAnalysisNigeria to cut crude production for exceeding OPEC quota

Nigeria to cut crude production for exceeding OPEC quota

Nigeria has said it is ready to make additional oil output cuts from July to September to compensate for producing more than its quota in May and June, when the Organisation of Petroleum Exporting Countries and its allies implemented a massive production cut deal.

OPEC and its allies, a group called OPEC+, decided in April to cut output by a record 9.7 million barrels per day to lift prices battered by a demand drop linked to lockdown measures aimed at stopping the spread of the coronavirus.

“As OPEC meets today, Nigeria reconfirms our commitment under the existing agreement,” the Minister of State for Petroleum Resources, Chief Timipre Sylva, said on its Twitter handle on Saturday.

Sylva said the country “subscribes to the concept of compensation by countries who are unable to attain full conformity (100 per cent) in May and June to accommodate it in July, August and September.”

OPEC+ agreed to a one-month extension of its record output cuts on Saturday and adopted more stringent methods to ensure members don’t break their production pledges, Bloomberg reports.

Delegates at the videoconference said all nations had agreed to the new deal. The group will maintain its production cut of 9.7 million bpd to the end of July, instead of easing it to 7.7 million after this month as planned.

According to the meeting’s draft communique, any member that doesn’t implement 100 per cent of its production cuts in May and June will make extra reductions from July to September to compensate for their failings.

Oil has just posted a sixth weekly gain, more than doubling to $42.30  per barrel since April as traders anticipate tighter supplies as demand recovers from the coronavirus lockdowns.

The Secretary-general of OPEC, Mohammad Barkindo, said, “The productions adjustments agreed in April are by far the largest and longest in the history of OPEC, OPEC+ and the global oil industry.

“The unparalleled commitment, and the unity and courage for the common cause of oil market stability has been positive.”

The United States President Donald Trump on Friday hailed the cuts from OPEC and its allies for saving the American energy industry.

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