The Organisation of Petroleum Exporting Countries (OPEC) and its allies, on Monday, agreed to cut global oil production by 100,000 barrels per day (bpd) in October, reducing Nigeria’s cap by 0.2 percent.
Under the new production schedule agreed in a virtual meeting, Africa’s biggest economy will see its quota decrease to 1.826 million barrels per day for October.
The expected output quotas for Nigeria were 1.799, 1.826, and 1.830 mpd for July, August, and September respectively.
Nigeria, which lost its top oil producer spot to Angola in the past three months, has struggled to meet previous quotas on the back of crude theft and the waves of divestments by oil majors from onshore and shallow water assets in the country.
According to data obtained by BusinessDay from the cartel report, Nigeria’s oil production increased by 5.6 percent to 1.4 million barrels per day (bpd) in January 2022, up from 1.3 million bpd in December 2021.
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However, the latest OPEC report shows that the country has been unable to push on the stride, as it has recorded a 9.9 percent decline since then.
Experts attribute the country’s inability to meet production targets to crude theft, sabotage of oil infrastructure, and ineffective regulatory and fiscal policies.
Meanwhile, the oil cartel noted the adverse impact of volatility and the decline in liquidity in the current oil market, and the need to support the market’s stability and its efficient functioning.
The decision by OPEC+ to cut crude came 52 days after Joe Biden, the US President, went to Saudi Arabia to solicit for increased output of oil.
Sanctions on Russian energy have led to an unprecedented surge in oil and gas prices, which in turn have contributed to rising inflation rates in the US and Europe.
Against this backdrop, Biden prioritised finding replacements for Russian energy sources by reaching out to Venezuela, Iran, the United Arab Emirates, and Saudi Arabia. However, experts say Saudi Arabia and the UAE declined because they did not want to be dictated to by the West.
Various reports also indicate that with this development, the cartel stands ready to meet again at short notice to reduce output further if needed.
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