Nigeria, others may cut oil production

By Tunde Shorunke

The Organisation for Petroleum Exporting Countries (OPEC) and others are under pressure to further cut production in the coming months due to the continual fluctuation of crude oil prices.

Nigeria, Iraq, Russia, Kazakhstan and the UAE have been non-compliant, according to OPEC+ source, as Crude oil price has continued to trade in a tight range on a low volume.

Last week’s range consists of only 160 pips, the tightest since April last year, Daily Times gathered.

However, the price action has continued to trade in an uptrend due to the series of rising lows.

The global oil prices closed barely higher in another lowvolume last week trading session. As at 11:59 am CST 22/08/2020, Nigerian Bonny light crude was traded at $43.13 with -2.11 per cent change in prices.

Crude oil price closed the week 0.17 per cent higher in another low-volume weekly trading session, reports show that some OPEC+ countries will have to slash their production in August and September to offset oversupply.

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In order to balance the excessive production and output levels from May to July, certain OPEC+ countries are under pressure to cut production in the coming months.

However, some countries such as Iraq and Nigeria, are asked to slash output by over a million barrels per day for two months to compensate their non-compliance.

According to the OPEC+ source, “Those compensation cuts are only for August and September and they are in addition to the current existing output cuts by the members,” Additional cuts are needed as these countries produced above the agreed monthly targets.

In addition to Iraq and Nigeria, the understanding is that Russia, Kazakhstan and the UAE were also non-compliant.

“The extra cuts, if evenly distributed, would mean that the effective reduction in supplies from the group would be around 8.85 million bpd in August and September,” the report notes.