If the news emanating from Russia, a leading member of OPEC + is anything to go by, then Nigeria and other countries who are major importers of refined petroleum products are in trouble.
This is because the cartel and its alliances are not prepared to add more crude to the market soon.
It also means that the desire of America to keep the price of crude oil at a reasonable price will hit a brick wall as the waivers granted those who were given concession to lift Iran crude oil would have been stopped by yesterday by the United States of America.
This action by USA is set to create a supply gap at the international market which will affect the price of crude oil.
Already the price of Brent which is the equivalent of Nigerian Bonny light is $ 72.31 per barrel, while the WTI is $62.22 per barrel . The OPEC basket is put at $72.38 per barrel.
Recently, the Minister of State for Petroleum Resources Emmanuel Kachikwu has said the country is in support of a six-month extension of the current quota restriction in oil production by OPEC and its allies.
He said OPEC would maintain production quotas after June if other suppliers boost output and the market remains as it is, though the group is likely to scale back cuts if supply tightens, Kachikwu said. “There definitely will be some quotas” after June, he said.
Slower growth in oil demand is “worrisome,” the minister told Bloomberg Television in Saudi Arabia just as the United States of America has vowed to enforce sanctions on Iran and would not extend the waivers given to those lifting its crude oil come May 1st, 2019.
What this means is that if the production cut extends by six months the price of crude oil would continue to increase at the international market and thereby putting pressure on Nigeria which is a net importer of petroleum products, despite the fact that it is a major oil producer.
Russian president Vladimir Putin had said in China that Russia was meeting its obligations under the OPEC/non-OPEC crude production agreement, and participants remained committed to the arrangement, despite on-going uncertainty over world energy market developments.
He said: “As far as we know, all our partners in OPEC, including Saudi Arabia, are not giving up on the agreements that we reached within OPEC+,” Putin said Saturday during a press conference in Beijing, according to a transcript posted on the Kremlin website.
“We have no news, no information from our Saudi counterparts or from any other OPEC members that they are ready to withdraw from these agreements,” Putin said.
“Nobody has come to us with this question. Moreover it seems unlikely as Saudi Arabia initiated the OPEC+ agreement and Saudi Arabia brought Russia to these agreements.”
Under the latest production cut agreement, Russia agreed to gradually cut output in the first half of 2019 by around 230,000 b/d from October 2018 levels of 11.421 million b/d. Russia is set to release output data for April.
Full-month figures for March indicated that Russia’s crude oil and condensate production stood at 47.782 million mt, or around 11.298 million b/d.
This indicated that output in March was on average 123,000 b/d down from the October level of 11.421 mil b/d.
So far Putin, and Russian energy minister Alexander Novak, have given no clear indication of what approach Russia will take on output volumes in the second half of 2019, citing on-going uncertainty on the market.
This includes output in Iran, which is expected to fall on the US decision to end sanctions waivers for buyers of Iranian crude.
“US decisions related to Iran sanctions, should come into force, if I remember correctly, at the beginning of May,” Putin said. “I can’t imagine how the global energy market will respond to these events.”
Putin said he did not discuss this in detail with his Chinese counterpart Xi Jiping during his visit to China, but said Russia is ready to meet demand from China and other countries.
Olusola Bello with agency report