Opec moved yesterday to cap Nigerian oil output and called on several members to boost compliance with production cuts to help clear excessive global stocks and support flagging prices.
Opec has agreed with several non-Opec producers led by Russia to cut oil output by a combined 1.8m barrels per day (bpd) from January 2017 until the end of March 2018.
Opec states Libya and Nigeria were exempted from the limits to help their oil industries recover from years of unrest.
The deal to curb output propelled crude prices above $58 a barrel in January but they have since slipped back to a $45-$50 range as the effort to drain global inventories has taken longer than expected.
Rising output from US shale producers has offset the impact of the output curbs, as has climbing production from Libya and Nigeria.
A ministerial committee of Opec and non-Opec states that monitors the global oil pact said it had agreed Nigeria would join the deal by capping or even cutting its output from 1.8m bpd, once it stabilises at that level from 1.7m bpd recently.
The monitoring committee, which met yesterday in St Petersburg, did not give the timeframe for when this would happen, saying it would track Nigerian production patterns in the next weeks.
The committee did not back capping Libyan output as it said its production was unlikely to exceed one million bpd in the near future compared to its capacity of 1.4m-1.6m bpd before unrest erupted in 2011 and plunged the nation into chaos.
Brent oil prices rose about 1% to about $48.50, helped by news of a cap on Nigeria and by comments from Saudi Energy Minister Khalid al-Falih that the kingdom’s exports would fall to 6.6m bpd in August as demand at home was rising, effectively representing a cut of one million bpd year-on-year.
Russia and Saudi Arabia face mounting pressure to prop up oil prices.
Russia, which is heavily reliant on oil revenues, holds a presidential election next year. Saudi Arabia needs higher prices to balance its budget and support next year’s planned listing of state oil firm Aramco.
Falih said weaker compliance with cuts by some OPEC states and a rise in OPEC exports had led to a softer crude price.
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