The Nigerian National Petroleum Corporation (NNPC) will maintain its crude oil production cut despite the recent bearish trend in the global oil market.
The Group Managing Director of NNPC, Mallam Mele Kyari, made this known in a statement issued in Abuja on Wednesday.
The details: NNPC reaffirmed that it has unwavering commitment to production adjustments agreed upon under the Declaration of Cooperation (DoC) between member-countries of the Organization of the Petroleum Exporting Countries (OPEC) and Non-OPEC Countries at the last Ministerial Meeting of what is known as OPEC Plus, held on July 2, 2019, Vienna, Austria.
According to Kyari, Nigeria is totally committed to full compliance with the agreement reached by the parties. The NNPC boss stated that with the increasing volatility of the oil market, it has become necessary for Nigeria and other countries to strongly comply with the OPEC’s supply cut.
“Right now, we are not only committed to the agreement, but we have elevated our attitude towards it to the point of complete devotion to the adjustments and we urge other parties to follow suit.”
Recent Development: Kyari’s statement came against the backdrop of the recent dip in the prices of crude oil due to the ongoing trade war between the U.S and China. Last week, Nairametrics revealed that the price of crude oil posted a 7-month low, declining by 4% to $57 a barrel in two days. At the time of filing this report, Brent crude oil price stood at $58.3 per barrel.
- Analysts have thereby raised concerns over the continued bearish trend in the oil market, stressing that Nigeria’s 2019 budget implementation is under threat as oil is Nigeria’s main source of revenue.
- Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) has stated it would maintain its production cut in order to fight off market pressure. Specifically, OPEC plans to regulate the crude oil market throughout 2019.
- OPEC had used its production cut approach to drive up oil price until the U.S-China trade war and several sanctions caused a dip in the market.
Oil price outlook: In line with OPEC’s expectation for demand to rise and improve prices, Kyari expressed strong optimism that the momentary and artificially induced bearish trends would naturally correct itself based on the strong market fundamentals which have remained steadfast despite the price slid.
According to Kyari, due to the visibly steady decline in commercial stock overhang propelled by healthy demand, it is only logical for all advocates of oil price stability like the OPEC Plus allies to comply strictly with the agreed production adjustments.