Oil hits $57 as NNPC reiterates commitment to output cut

BRENT crude on Wednesday rose above $57 a barrel for the first time in almost a year thanks to Saudi Arabia’s decision to cut an additional one million bpd in production in February and March as the collective non-member countries of the Organisation of Petroleum Exporting Countries’ (OPEC+) effort to control prices appeared to not be effective enough for the Kingdom.

Nigeria, Africa’s major oil producer, depends on earnings from oil to finance its N13.588 trillion budget for this year. The budget has a benchmark oil price of $40 per barrel; daily oil production estimate of 1.86 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day); exchange rate of N379 per US Dollar; GDP growth projected at three per cent; and inflation closing at 11.95 per cent.

The Nigerian National Petroleum Corporation (NNPC) has reiterated its commitment to abide by the output cut agreement of the OPEC and its allies called OPEC+, to stabilise the global oil market.

Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, who gave the assurance at the ongoing virtual Gulf Intelligence UAE Global Energy Forum 2021, said despite the negative effects of the production cuts on government revenue, it was the best step towards redeeming the value of oil on the global market, in the interest of all.

Vice President Yemi Osinbajo (SAN) has tasked stakeholders in the oil industry to devise cheaper ways of producing larger volumes of oil.

The Vice President gave the charge during a virtual meeting on the Petroleum Industry Bill (PIB) with stakeholders in the industry under the auspices of the Oil Producers Trade Section (OPTS) in Nigeria, and Independent Petroleum Producers Group (IPPG).

According to him, stakeholders should achieve this while also ensuring a more competitive environment that meets the needs and purposes of the nation.

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“We need to agree on terms that will give us a more competitive environment. We should find a way of producing oil cheaper at the largest volume possible given the circumstances and future of oil itself, and of course, given our requirements and needs,” Osinbajo.

The further jump of oil prices yesterday came after the Energy Information Administration (EIA) reported a crude oil inventory draw of 3.2 million barrels for the week to January 8.

This compared with an estimated draw of 5.82 million barrels from the American Petroleum Institute (API) and analyst expectations of a draw totalling 2.72 million barrels.

It also adds onto the inventory decline of as much as 8 million barrels reported for the previous week, which helped push oil prices higher.

The decision of Saudi Arabia spurred talk of tight supply facing the world despite still sluggish demand amid still high new Covid-19 case numbers in some key markets, including the United States and India, even though demand is improving strongly in India as fuel demand booms.

The Nation


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