By Nse Anthony-Uko
(Sundiata Post) – Finally, the Organization of Petroleum Exporting Countries (OPEC) is set to cap Nigeria’s oil output, though there is no timeframe yet when this would happen. The monitoring committee, known as JMMC said it would track Nigerian production patterns in the next weeks. Brent oil prices rose immediately by about 1 percent to hit $48.50 with the news of a cap on Nigeria and by comments from Saudi Energy Minister Khalid al-Falih that the kingdom’s exports would fall to 6.6 million bpd in August as demand at home was rising, effectively representing a cut of 1 million bpd year-on-year. A ministerial committee of OPEC and non-OPEC states that monitors the global oil pact said it had agreed Nigeria would join the deal by capping or even cutting its output from 1.8 million bpd, once it stabilizes at that level from 1.7 million bpd recently.
Mohammed Rumhy, Omani oil minister said in St Petersburg, that Libya and Nigeria should have their exemptions from the cuts rescinded and they should stop talking about their plans to increase production, which he said was contributing to bearish sentiment in the market. The committee did not back capping Libyan output as it said its production was unlikely to exceed 1 million bpd in the near future compared to its capacity of 1.4 million-1.6 million bpd before unrest erupted in 2011 and plunged the nation into chaos. Libya’s oil production is 1.069 million b/d, and the country hopes to grow its output to as much as 1.25 million b/d this year. OPEC also called on several members to boost compliance with production cuts to help clear excessive global stocks and support flagging prices.
OPEC had agreed with several non-OPEC producers led by Russia to cut oil output by a combined 1.8 million barrels per day (bpd) from January 2017 until the end of March 2018 but Libya and Nigeria were exempted from the limits to help them recover from years of unrest and militancy. The deal to curb output propelled crude prices above $58 a barrel in January but they have since slipped back to a $45 to $50 range as the effort to drain global inventories has taken longer than expected. Rising output from US shale producers has offset the impact of the output curbs, as has climbing production from Libya and Nigeria
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