OPEC: Nigeria faces possible oil peg by July

According to sources closer to the situation, Daily Times learnt that Nigeria’s growing oil production and exports, threaten efforts by Organisation of Petroleum Exporting Countries, OPEC, and non-OPEC members to curb glut and increase price at the international oil market.

As a result, sources hinted that Nigeria, Libya and Iran may be asked to quit adding more barrels to their exports at the July meeting in Russia.

Crude oil futures are traded higher on Monday, driven by profit-taking, short-covering and aggressive counter-trend bargain hunting.

At 0403 GMT, August West Texas Intermediate crude oil futures are trading $43.52, up $0.51 or +1.16% and internationally-favoured September Brent crude oil futures, are at $46.29, up $0.54 or +1.18%.

The price of OPEC’s basket of fourteen crude stood at $44.23 a barrel on Tuesday, compared with $43.14 the previous day, according to OPEC’s Secretariat calculations.

“A large cut could be an option. And further steps could be to ask Nigeria, Libya and Iran to put a restriction on their exports. They won’t be asked to cut though,” it said.

OPEC added that the countries exempted from the cuts are currently posing threat to the cut deal and efforts to shove up prices. Iran was given a small increase, so it could recover market share lost while under Western sanctions.

According to the international oil cartel,“We really don’t see the essence of the cut if the likes of Nigeria, Iran and Libya are being allowed to pump more into the market. As you can see, their exports keeps rising and have crashed prices below $50 which was not the intended intention at the beginning of the cut deal.”

Nigeria’s oil production is set to hit 1.8 million barrels per day, as Royal Dutch Shell recently lifted force majeure on exports on Forcados crude oil.
Force majeure is a legal declaration that means the operator cannot fulfill a contract due to circumstances outside its control.

According to a statement issued by the company, Nigeria’s oil exports is now back fully for the first time in 16 months since its shutdown.
Forcados exports between 200,000-240,000 barrels per day (bpd), bringing Nigeria’s production to around 1.8 million-bpd.

Once the country hits 1.8mbpd target then, Minister of State for Petroleum resources, Dr. Ibe Kachukwu, said it would be joining OPEC’s output cut. The country’s planned export for August production would be atleast 2 million barrels per day, according to data available to Daily Times.

Libya is said to target 1 million bpd by the end of July, up from an average of 650,000 bpd in the first quarter.

Nigeria and Libya were exempted from making the output cut due to political instability in Libya, and pipeline vandalisation by militants in Nigeria’s Niger Delta.

OPEC producers agreed last month to extend output cuts of about 1.8 million bpd until March, 2018.

Forcados had been under force majeure since February 2016, after a militant attack on the main export route, the Trans Forcados Pipeline.