The Organisation of Petroleum Exporting Countries (OPEC) and its allies, including Russia and Kuwait on Thursday agreed to stick to a scheduled 432,000 barrels per day (bpd) in its June crude production raising Nigeria’s cap by 1.1 percent.
Under the new production schedule agreed in a virtual meeting, Africa’s biggest producer will see its quota increase to 1.77 million barrels per day for June.
However, Nigeria has struggled to meet previous quotas and the wave of divestments by international oil producers from onshore and shallow water assets in the Niger Delta indicates the country will struggle to meet future quotas.
Data gleaned by BusinessDay from the cartel’s reports have revealed that Nigeria’s oil production increased by 5.6 percent to 1.4 million barrels per day (bpd) in January 2022 from 1.3 million bpd in December 2021.
However, the latest OPEC report shows that the country could not build on that momentum as it has recorded a 4.2 percent decline since then.
Experts have blamed the country’s inability to meet its production targets on crude theft, sabotage of oil infrastructure and poor regulatory and fiscal terms.
Read also: OPEC pegs Nigeria’s June quota at 1.77m bpd
OPEC and its allies plan to restore regular increases halted by the 2020 pandemic.
The decision to stay the course was widely expected, and it comes as mounting uncertainty over Russian production is tempered by continued pressure on Chinese oil demand growth as a result of the Covid lockdown.
It was noted by the oil cartels’ in an official statement that continuing oil market fundamentals and consensus on the outlook pointed to a balanced market.
Also, OPEC stated the continuing effects of geopolitical factors and issues related to the ongoing pandemic affecting its decisions.
Meanwhile, since the invasion of Ukraine, Russia’s oil sector has faced significant headwinds, with many companies avoiding Russian imports and domestic consumption slowing.
If the EU follows through on its plan to phase out Russian oil by the end of the year, the pressure on Moscow will increase.
Furthermore, Moscow has earlier admitted that its output is on the decline on the back of various sanctions on the country.
The OPEC+ group sees the disruption in Russian supply as a geopolitical event with uncertain consequences, rather than a fundamental market development that necessitates a response.
However, many delegates have admitted, both privately and publicly, that the coalition, even if it wanted to, has limited room to compensate for the loss of Russian output.
