Ahead of a crucial high-staked meeting of the Organization of Petroleum Export Countries and its allies known as OPEC+ this week, Nigeria and Saudi Arabia have reiterated their firm commitment to the agreement on full implementation of the oil cut deal.
This development is coming on the heels of a disclosure by the Minister of State for Petroleum Resources, Timipriye Sylva, that the two countries reiterated commitment to the level of production cuts to reduce output following a phone discussion with Prince Abdulaziz Bin Salman Al Saud, the Saudi Minister for Energy.
According to him, the discussion focused on developments in the global oil markets, the improvement in demand for oil, and progress toward full implementation of the OPEC+ agreement.
“Prince Abdulaziz bin Salman, Chairman, Joint Ministerial Monitoring Committee of OPEC+, emphasized the importance for all OPEC+ participants at the meeting their production cut as stated in the agreement, in order to accelerate the rebalancing of the global oil market,” he said.
Sylva further confirmed the commitment of Nigeria to the OPEC+ agreement and clarified that the country had not yet met the terms of the agreement and was currently below the level of the agreed cuts.
He also confirmed that Nigeria would raise its level of conformity to 100 percent and would compensate, during the months of July, August, and September, for the over-production in May and June.
He noted that at the end of the call, the two ministers stressed that efforts by OPEC+ countries toward meeting production cuts as stated in the agreement would enhance oil market stability. The minister added that it would also help accelerate the rebalancing of global oil markets.
Recall that any surge in crude oil prices is a source of good news to Nigeria as this will boost government revenue and improve liquidity in the foreign exchange market. This is based on the premise that oil exports contribute about 90% of Nigeria’s foreign exchange earnings, as such if there is any surge, it will provide some level of stability to the country’s already fragile economy.