Oil Cuts: Nigeria, Others Under Pressure, OPEC+ Meets
Nigeria and other countries that have been exceeding their oil production quotas came under fresh pressure on Wednesday as the Organisation of Petroleum Exporting Countries and its allies met to review compliance with the output cuts meant to prop up oil prices.
OPEC and its allies, known as OPEC+, agreed in April to an output cut to offset a slump in demand and prices caused by the coronavirus crisis.
They decided to cut supply by a record 9.7 million bpd for May and June but the deal was extended in July by one month.
Saudi Arabia’s Energy Minister, Prince Abdul Aziz Bin Salman, at the 21st meeting of the Joint Ministerial Monitoring Committee on Wednesday, said there were encouraging signs that oil demand was recovering as economies continued to reopen in many parts of the world.
He said after agreeing on the biggest cut in history in April, OPEC+ had achieved unprecedented levels of compliance at 97 per cent, adding that several participants hit record levels of compliance.
He said, “Just as significant, we have agreed, and began to implement, a detailed schedule of compensation for past over-production.
“We should endeavour to put this temporary compensation regime behind us, by clearing all the past overproduction by end of September.”
The Saudi minister, who chaired the meeting alongside Russia’s Minister of Energy, Alexander Novak, urged members to strive to achieve full adherence to their agreements moving forward.
“Not only does this accelerate the rebalancing of global oil markets, it also sends out a serious message that there is a new spirit of determination and discipline in our group,” he said.
Saudi Arabia, OPEC de facto leader, had kept up the pressure on Nigeria and other underperforming participating countries, hours before the Wednesday meeting, according to Bloomberg.
The Saudi minister called the Nigerian President Muhammadu Buhari to emphasise the importance of complying with production quotas and compensating for past shortcomings, state-run Saudi Press Agency was quoted as saying on Wednesday.
Nigeria, Iraq and several other nations have consistently fallen short of their pledges to cut production as OPEC+ seek to offset the sharp drop in oil demand triggered by the coronavirus pandemic.
Under the April deal, Nigeria was expected to cap its production at 1.41 million bpd in May and June but the country overproduced during the period.
