Nigeria has agreed to reduce its oil output as the group strives to prevent a glut amid soaring United States’ production and a slowing global economy.
This is coming after several months of producing above the quota given by the Organisation of Petroleum Exporting Countries, the oil cartel had said on Wednesday in its Monthly Oil Market Report for September that all oil-producing countries must support market stability to avoid unwanted volatility and a potential relapse into market imbalance.
OPEC and 10 non-OPEC countries agreed in December 2018 to cut oil production by 1.2 million barrels per day effective from January for an initial period of six months to help balance the market and support prices. They agreed in July to extend the deal through the first quarter of 2020.
Oil prices have dropped below $60 per barrel in recent weeks from their 2019 peaks of $75 as fears of a global recession outweigh concerns about falling supply from sanctions-hit Iran and Venezuela.
A market-monitoring committee formed by OPEC and its allies, called Joint Ministerial Monitoring Committee, met on Thursday in Abu Dhabi, United Arab Emirates, ahead of their policy discussions in Vienna in December.
The committee said in a statement that conformity with the voluntary production adjustments remained high at 136 per cent in August but noted that some participating countries, such as Iraq and Nigeria, had been producing above their quota.
OPEC members pumped 29.74 million barrels per day in August, up 136,000 bpd on July, with increases mostly in Saudi Arabia, Nigeria, Iraq and the UAE.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, and his counterpart from Iraq pledged on Thursday to reduce oil output to comply with their OPEC output quotas.
Nigeria’s oil production rose to 1.91 million bpd in August from 1.83 million bpd, based on direct communication. The country was given a new quota of 1.685 million bpd in December.
Iraq, OPEC’s second-largest oil producer, has been pumping 4.8 million bpd in recent months instead of its target of 4.512 million.
Highlighting the need for equity, fairness and transparency, the JMMC urged all participating countries to intensify their efforts in pursuit of full and timely conformity with their voluntary production adjustments.
It said, “All participating countries present, particularly those who are yet to reach full conformity with their adjustments, were unequivocal in providing steadfast assurances of their determination to achieve at least 100 per cent conformity for the remainder of the year.
“Those countries who have over-conformed also reiterated their voluntary contribution. Reluctantly, overall conformity will be brought to record levels.”
The committee said it analyzed the range of critical uncertainties facing the global economy in 2019 and 2020, including trade-related tensions, monetary policies and other macroeconomic factors.
It urged continued vigilance in monitoring oil market conditions ahead of the Ministerial Meetings in early December.