By John Meze
The current crude oil output cut by the Organisation of Petroleum Exporting Countries (OPEC) may have increased Nigeria’s proceeds from the international crude oil market.
According to experts, who observed that, though, this may be minimal given the apathy being faced by the country’s product which had been seeing differentials since May last year, the current situation may enhance proceeds for the government to continue its diversification exercise.
Nigeria may be realising as much as $101.1064 million per day from the market which witnessed an increase in price of about 2% following the OPEC output cut.
The country’s market delivery, according to the Nigerian National Petroleum Corporation (NNPC) is about 686,662,833 barrels approximately 1.88 million barrels per day of crude oil and condensate both for domestic and export purposes.
Crude oil prices rallied, after OPEC significantly reduced its crude output in January, making good on its latest deal to curb production and stave off a global glut in supplies.
OPEC, in its closely watched monthly report, said its oil production had fallen by 797,000 barrels a day (bp/d) in January to 30.81mb/d whereas U.S. West Texas Intermediate crude futures for March delivery on the New York Mercantile Exchange jumped $1.38, or around 2.6 percent, to $53.78 a barrel.
Going by this development which saw the price hike to 53.78pb, Nigeria supply to the market which stands at about 1.88mb/p is being assumed to be capable of garnering for the country about $101.1064 million per day from the market.
According to the market watchers the bulk of the cuts were shouldered by Saudi Arabia, the world’s top oil exporter and de facto leader of OPEC where the kingdom scaled down its output of about 10.2 million bpd in January by 350,000 bpd from December.
Khalid al-Falih, Saudi Energy Minister, informed that Riyadh will continue to cut production, reducing output to about 9.8 million bpd in March.
In December, OPEC and a group of 10 producers outside the cartel, led by Russia, agreed to collectively cut production by a total of 1.2 million bpd through the first six months of 2019.
Oil’s gains also came as appetite for riskier assets improved after lawmakers reached a tentative deal to avert another partial U.S. government shutdown and the U.S. and China expressed optimism about their ongoing trade talks.
Brent oil for April delivery on the ICE (NYSE:ICE) Futures Exchange in London rose $1.51, or about 2.4 percent, to $63.01 a barrel.