The Organisation of Petroleum Exporting Countries(OPEC)’s meeting ended without a resolution on amounts to be cut by the member nations.
As part of efforts to stabilise oil prices, OPEC countries agreed to cut supplies.
Saudi Arabia, who are the leading producers of oil in the world cut 500,000 barrels from their supplies as part of their efforts to ensure stable oil prices are maintained.
In his opening address, OPEC President and United Arab Emirates (UAE) Minister of Energy and Industry, Suhail Al-Mazrouei, harped on the need for the group to continue look towards its internal rebalancing mechanism as a means of stabilising the oil market.
Al-Mazrouei revealed that the outlook for 2019 suggests new challenges for oil regions, with potential higher supply growth bringing demand down.
While most members agreed that a moderate reduction of an average of one million to about 1.3 million barrels cut was needed, delegates could not come together on how to share, and the volume non-OPEC partners, like Russia, would contribute.
Nigeria’s representative and Minister of State for Petroleum Resources, Ibe Kachikwu, informed Bloomberg before the meeting on Thursday the group was not expected to go beyond a range of between 800,000 and 1 million barrels per day, or 1 million and 1.3 million barrels proposed by the group’s Economic Advisory Board.
“Some countries will struggle. Their economies are very constrained and tight. The smaller the cut, we will participate, and the larger it is, we will struggle to participate,” he said.
The Minister of State for Petroleum however added that considering the consensus reached for all member nations to contribute to the effort to stabilize the market and help boost prices, Nigeria was ready to take a ‘small cut’ in line with whatever resolution the meeting would arrive at.
He said after Nigeria got exemptions three times between January 1, 2017 and last July, there was need to join the collective effort to bring production and supply to a balance.
“We are keeping all fingers crossed. We got exemptions three times. This time, there is a decision that everyone must be seen to chip in something,” he said.
Mr Kachikwu said with the levels dropping to $59 per barrel, from $62, the general outlook was for prices to be pushed up from an average of about $65 and $67 per barrel to about $70.
He added that despite the fact that Nigeria is going into the period of elections, the usual investment reactions remained “fantastic”.
He said the country will have to wait and see what comes after elections, suggesting that if President Muhammad Buhari wins in his bid for a reelection, the investments would begin to move in.
As soon as words got out about the inability of OPEC to come to a consensus on production cut, the crude oil market suffered a plunge in prices, with oil prices declining by about 5.2 per cent to $58.36 a barrel, from about $59.34 a day earlier.