Nigeria Expects Crude Oil to Gain $15 Per Barrel

By Modupe Gbadeyanka

Nigeria’s Minister of State for Petroleum Resources, Mr Timipre Sylva, has said the country expects prices of crude oil to rebound by at least $15 per barrel after producing nations agreed to an output cut last week.

Last Thursday, members of the Organisation of the Petroleum Exporting Countries (OPEC) and non-members, in an effort to stabilise the oil market, agreed to reduce production by nearly 10 million barrels per day.

On Sunday, another meeting was held through a video-conference and Nigeria, which is part of OPEC, joined others to discuss modalities for the production ceiling.

It was agreed that the first phase of the deal will be between May and June 2020 and parties will reduce supply to the market 9.7 million barrels per day.

For the second phase, which is between July and December 2020, OPEC+ will cut production by 8 million barrels per day and for the third phase, which is from January 2021 to April 2022, those who signed the agreement, including Nigeria, will reduce production by 6 million barrels per day.

Commenting on this development, Mr Sylva said based on reference production of Nigeria of October 2018 of 1.829 million barrels per day of dry crude oil, the country, which is Africa’s largest producer, will now be producing 1.412 million barrels per day, 1.495 million barrels per day and 1.579 million barrels per day respectively for the corresponding periods in the agreement.

According to him, this development “will enable the rebalancing of the oil markets and the expected rebound of prices by $15 per barrel in the short term.”

“This also promises an appropriate balancing of Nigeria’s 2020 budget that has been rebased at $30 per barrel,” the Minister added.

At last Thursday’s meeting, Mexico had initially refused to the proposal, but on Sunday, the country agreed after the intervention of the United States of America. Mexico agreed to a cut of 100,000 barrels per day and this will be complemented by an additional 300,000 barrels per day by United States producers.