The Secretary-General of the Organisation of Petroleum Exporting Countries, OPEC, Dr. Mohammed Sanusi Barkindo, has said it is too early to say when production caps should be imposed on Nigeria and Libya.
Barkindo stated this at an economic forum in Russia’s St Petersburg, adding that the two countries “have a lot of issues to solve,” according to Reuters.
On oil price decline, he said, “We have no issues with people taking positions in the market; we are focusing on fundamentals.”
He stated that Russian Prime Minister, Dmitry Medvedev, told him that the country was fully committed to complying with output cuts.
Meanwhile, Nigerian crude differentials were under pressure on Thursday from the prospect of more plentiful supplies due to the return of Forcados exports.
Reuters quoted a trader as saying that about 15 June-loading cargoes were available, in addition to more July-loading barrels.
Qua Iboe was last heard to be offered at dated Brent plus $1.00, although one trader put the value closer to dated Brent plus 50-70 cents.
The Forcados stream has loaded three cargoes in May, according to shipping schedules, after being shut down for months, adding to supplies.
The Forcados export terminal was shut down in February 2016 following militant attacks and Shell Petroleum Development Company of Nigeria declared a force majeure on exports of the grade.
While the force majeure remained in place, the terminal was reopened in October but suffered another attack by militants.
When contacted, the spokesperson for the SPDC, Mr. Bamidele Odugbesan, said, “The force majeure on Forcados is still very much in place and any update will be duly communicated.”
Last week, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said test loadings had begun at the Forcados terminal, adding, “We still need to repair a lot of the secondary infrastructure that was damaged by militancy.”
He said the nation’s oil production was still hovering around 1.5 million barrels per day, down from around 2.2 million b/d.
“But my projection is that within the six to nine months’ window, all things being equal, militancy remaining calm and the investment that is required is urgently done to repair the existing pipelines, we should get to the sort of figure that we had before,” the minister said.
Meanwhile, oil prices tumbled on Friday amid worries that United States’ President Donald Trump’s decision to abandon a climate pact could spark more crude drilling in the United States, US.
The analyst said the U.S’ decision may worsen global glut.
Brent crude tumbled below $50 Friday afternoon, heading for a second straight week of losses, while Benchmark Brent crude futures were off by 1.8 percent at $49.73 per barrel, down 90 cents from the previous close.
On its part, the US West Texas Intermediate crude futures fell 84 cents to $47.54 per barrel, figures from Reuters show.
The U.S. withdrawal from the landmark 2015 global agreement to fight climate change drew condemnation from Washington’s allies and sparked fears that U.S. oil production could expand even more rapidly.
“I think we will see a United States that is about to go crazy in terms of producing fossil fuels,” Matt Stanley, a fuel broker at Freight Services International in Dubai, said in an interview with Reuters on Friday.
He also expressed fear that other producers could do the same.
“Why wouldn’t they ramp up production when producers like the U.S. have an open invite to do as they please?” he said.
In May, the Organisation of the Petroleum Exporting Countries, OPEC, and a number of non-OPEC producers met in Vienna to extend a deal to cut 1.8 million b/d from the market until March 2018.
OPEC, in addition, discussed reducing output by a further 1 to 1.5 percent, and could revisit the proposal should inventories remain high.
Oil prices are down some 10 percent since OPEC’s May 25 decision to extend the cuts.
Rising output from OPEC members, Nigeria and Libya, which were exempted from the output reduction deal, is also undercutting attempts to limit production.
Already, Nigeria on Friday issued a loading plan for the long-closed Forcados export stream that could push exports to about 15-month highs in June.
Similarly, on Friday, demand for bearish puts expiring in March 2018 spiked, indicating traders and investors are already protecting against a more aggressive drop in price once OPEC’s joint supply deal expires.
Last week, U.S. crude production was up by nearly 500,000 barrels per day (b/d) from year-earlier levels, straining OPEC’s efforts to reduce global oversupply.