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WTI crude prices inched higher…
Nigeria’s Petroleum Minister Emmanuel Ibe Kachikwu admitted that reducing oil production to the quota assigned by OPEC is a challenge, not least because of the start of production at the Egina oil field.
The offshore field will have a capacity of 150,000 bpd but, Kachikwu said, “We’re not there yet.”
Still, Nigeria is hoping the oil production cut deal OPEC agreed with its non-member partners led by Russia will be extended for another six months beyond the June deadline, Kachikwu told local media.
Interestingly, Nigeria doesn’t have much to do with the success of the deal, which has helped Brent climb to almost US$70. According to Bloomberg data, the West African country pumped some 1.92 million bpd in March, up by 90,000 bpd from February. Kachikwu, however, said production in March averaged 1.7 million bpd, slightly above the OPEC quota of 1.685 million bpd.
OPEC agreed to take 800,000 bpd off the market last December, with Russia and several other producers agreed to remove an additional 400,000 bpd for a total cut of 1.2 million bpd. Exempt from the previous cuts agreed in 2016, Nigeria had to be convinced to join these cuts, which Saudi Arabia took care of.
According to the Nigerian Petroleum Minister, the deal had succeeded in propping up prices “to a point where both consumers and producers are at least a bit comfortable. I would like to see that go on.”
Some large importers would probably disagree that prices above US$60 for Brent are comfortable for everyone, but most sellers are certainly happier at this price level. There is doubt, however, that Russia will agree to an extension since it doesn’t need oil to be as expensive as most Middle East producers do. There have been reports that Moscow may only agree to a three-month extension, which would weigh on prices.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.