The Organisation of Petroleum Exporting Countries (OPEC) agreed on Thursday to trim oil output by asking over-producing members Iraq and Nigeria to bring production in line with their targets as the group strives to prevent a glut amid soaring U.S. production and a slowing global economy.
This may lead lead to a shortfall in Nigeria’s earnings and affect foreign exchange income.
Oil prices LCOc1 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 the Organization of the Petroleum Exporting Countries and its allies, a grouping known as OPEC+, met on yesterday in Abu Dhabi ahead of their policy discussions in Vienna in December.
OPEC+ has overcomplied on average with its agreed cut of 1.2 million barrels per day (bpd) as Iranian and Venezuelan exports collapsed due to sanctions. But some members, such as Iraq and Nigeria, have been producing above their quota.
Iraq, OPEC’s second-largest oil producer, pledged on Thursday to reduce output by 175,000 bpd by October, while Nigeria is to reduce supply by 57,000 bpd.
Better compliance will deliver an output cut of more than 400,000 bpd, two OPEC+ sources told Reuters.
OPEC’s de facto leader, Saudi Arabia, will continue pumping less than its target, said Prince Abdulaziz bin Salman, who took over as energy minister from Khalid al-Falih on Sunday.
The kingdom will voluntarily overdeliver on its targets and pump just below 10 million bpd, Prince Abdulaziz said.