Nigeria cuts crude oil production by over 200,000 barrels daily, as oil price rises to $40 per barrel

OIL prices soared for the first time since March, as Nigeria’s crude oil equivalent Brent crude sold for $39.32 per barrel, despite calls by the Organisation of Petroleum Exporting Countries, OPEC, to extend the existing record crude oil output cuts by one month.

Nigeria’s crude benchmark, Brent crude traded at $39.32 on Thursday, while U.S. West Texas Intermediate, WTI, stood at $36.60, which is 1.1 per cent higher than its figures for May.

Timipre Sylva, Minister of State for Petroleum Resources in a statement revealed that Nigeria was set to join its OPEC counterparts to cut the global crude oil supply by 9.7 million barrels of crude daily after supplying 200,000 barrels per day above its cap resulting in a 52 per cent compliance rate.

“Nigeria has made concerted efforts to adhere to this commitment and will continue to do so unequivocally.

“Based on current NNPC data, Nigeria reduced its current production in May 2020 to 1.613kbd. The difference between its reference production of 1.829kbd with its May 2020 production figures is 216kbd,” he said.

Blaming Nigeria’s non-compliance to the crude oil production quota to the COVID-19 pandemic.

In May, OPEC listed Iraq, Nigeria, Angola and Kazakhstan as countries that need to cut down a combined 1.18 million barrels per day to become fully compliant to its agreement according to a Wall Street Journal report.

Sylva said the country’s current crude oil production had dipped, which was due to efforts in ensuring adequate compliance with the OPEC+ oil cut agreement.

“It is worthy to note that current daily crude oil production is well below the period commitment level of 1.412 million barrels per day and will translate to full compliance by the end of June 2020.

“Nigeria will continue to fully comply with the agreement and look forward to improving on its compliance levels for the lifespan of this historic intervention by OPEC+,” he stated.

Saudi Arabia and Russia have agreed to extend record oil-production cuts through July in an alliance that started in April in a bid to balance the global oil market and stabilise prices devastated by COVID-19 pandemic.

The April agreement anticipated the crude production cuts to 8 million barrels per day between July 1 and the end of the year would continue but in recent weeks de facto OPEC leader Saudi Arabia had been pushing for a deal that would keep the current restrictions for several months beyond July.