- OPEC Agrees to 9 Months Oil Cut Extension
The Organization of the Petroleum Exporting Countries (OPEC) on Thursday agreed to extend oil production cuts for 9 months following the surge in the U.S. production level.
The accord is expected to be shared by non-OPEC producers later on Thursday, a move that will see the 1.8 million barrel per day supply cut last until the first quarter of 2018.
Speaking before the meeting in Vienna, Nigeria’s Minister for State Oil, Emmanuel Ibe Kachikwu said: “If we stick to rules, we should look to a $50 floor.” However, he said oil price of $60 seems optimistic.
On production volume, the minister said Nigeria’s output level is still 1.5 million barrel per day on the average and below the 1.8 million barrel category as there are still a lot of maintenance to be done on disrupted pipelines in the Southern region of the country.
Responding to question on if Nigeria would join production cut, Saudi Arabia’s Energy Minister Khalid Al Falih said the Opec has taken into consideration Nigeria and Libya security situation and will continue to support the nations.
“We have said we will do whatever is necessary,” Mr. Falih said, adding that existing production curbs would, given time, prove “more than sufficient”.
This put to rest Iraq’s suggestion that Nigeria should also cut production if the organization is looking to extend production cut.
Brent, the global oil marker, was down 58 cents at $53.37 a barrel, partly on disappointment the cuts were extended for 9 months rather than a full year.
However, Emmanuel Kachikwu said, “There may be an option to roll over for 3 months.”
“This would further boost business confidence in the Nigerian market as it guarantees the sustainability of the ongoing CBN’s forex intervention, ” said Samed Olukoya, a foreign exchange research analyst at Investors King Ltd. Therefore, I would be expecting a surge in the foreign direct investment in the second quarter and an improvement in the Naira outlook going forward.”