The Organisation of Petroleum Exporting Countries (OPEC) yesterday agreed to the first oil production cut in eight years, leading to a price rally that saw oil prices hitting a one-month high of $50 per barrel.
Should oil prices continue to hover at slightly above $50 for a prolonged period, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said Nigeria would be comfortable with the price.
But the excitement in the country could be blighted by the militancy in the Niger Delta, which has seen Nigeria’s oil output fall below 2 million barrels per day (mpbd) since the beginning of the year.
Production shut-ins caused by the attacks on oil and gas infrastructure have impacted on oil earnings and exacerbated the foreign exchange scarcity in the country.
The production cut of 1.2mbpd by all OPEC members, including arch rivals Saudi Arabia and Iran, was seen as a major achievement by OPEC’s Secretary General, Nigeria’s Mohammad Barkindo, whose diplomatic shuttles since assumption of office in August, led to the “Algiers Accord” that sought to stabilise the market and boost prices.
OPEC President Mohammed Al-Sada, who announced the resolution yesterday at the end of the body’s 171st meeting in Vienna, Austria, said the adjustment in output would be shared among all members of the group, to bring their ceiling to 32.5 million barrels per day.
The cut is subject to a review after six months, with a possible rollover for another six months on the recommendation of a ministerial monitoring committee of three OPEC counties, namely, Kuwait, Venezuela and Algeria. The countries are to closely monitor the implementation and compliance with the agreement.
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