Nigeria retains exemption as OPEC extends output cut by 9 months

26 May 2017
Financial Nigeria


OPEC agreed to extend its production cut deal with non-OPEC members by nine months to March 2018.

Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu

The Organization for Petroleum Exporting Countries (OPEC) has agreed to extend its production cut deal with non-OPEC members, led by Russia, by nine months to March 2018. The new deal was agreed during the OPEC Minister’s meeting held in Vienna on Thursday.

“We considered various scenarios, from six to nine to 12 months, and we even considered options for a higher cut. But all indications discovered that a nine-month extension is the optimum," said Khalid al-Falih, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources.

In December 2016, OPEC and non-OPEC members agreed to reduce oil production by 1.8 million barrel of oil per day (bpd) – equivalent to 2 percent of global oil production – in the first half of 2017.

The production cut deal helped to push oil prices above $50 earlier this year, allowing oil-dependent countries such as Nigeria to increase budget revenues and replenish depleted foreign reserves.

OPEC and non-OPEC members agreed to extend cuts by the same 1.8 million bpd on Thursday. However, the exact split between OPEC and non-members may be altered given that Equatorial Guinea has joined the organization, reducing the number of participating non-OPEC nations to 10, according to Reuters.

Just like in the December deal, Nigeria and Libya were granted exemptions from the latest output cuts as ongoing armed conflicts have curbed their production.

On Friday, Brent crude, the global benchmark, fell 0.33 percent to $51.29 per barrel as at 11.13 GMT at the Atlanta-based Intercontinental Continental Exchange. On the New York Mercantile Exchange, the West Texas Intermediate, the US benchmark, rose 0.33 percent to $48.74 per barrel.

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