Nigeria expressed optimism that crude oil prices may rebound by $15 per barrel (about 50% higher than the about $30/b current price) in a short-term outlook, following the oil output cut agreement reached by OPEC, OPEC+ producers and G20 stakeholders on Sunday.
Saudi Arabia on Monday projected that effective global oil supply cuts may reach about 19.5 million barrels per day, taking into account the reduction pact agreed by OPEC+, pledges by other G20 nations and oil purchases into reserves.
Reacting to the latest developments in the global oil market, the Minister of State for Petroleum Resources, Timipre Sylva, expressed optimism that the projected price rebound would help in funding the country’s 2020 budget. “This also promises an appropriate balancing of Nigeria’s 2020 budget that has been rebased at $30 per barrel,” the minister added. The Chairman of the African Energy Chamber, NJ Ayuk lauded the efforts of the OPEC+ deal, noting that a stable oil market will provide economic relief and save jobs throughout the continent.
OPEC has hit a home run. OPEC has breathed life and given hope to African nations, oil workers, investors and the African business community. We need to focus on exploration soon again.
“Now we have the ball; we need to run with it and start the process of bouncing back. We need to defend the African oil industry like a junkyard dog in the face of a hurricane”, the industry expert added.
In what appeared a watershed in the global oil and gas industry, OPEC and its allies in the OPEC+ group on Sunday that, in conjunction with efforts from the G20 and International Energy Agency, could see up to cutting of 20 million barrels of oil per day from a severely oversupplied oil market. The deal is set to boost the oil price and provide some much-needed stability for an industry in crisis.
Initially announced Thursday, the agreement was delayed as Mexico refused their share of production cuts. The original OPEC+ deal would have seen a cut of 10 million barrels of crude per day from an October 2018 baseline, for an initial two-month period.
Reacting to the positive development, Secretary General of OPEC, Mohammed Barkindo, said: “These production adjustments are historic. They are largest in volume and the longest in duration, as they are planned to last for two years. We are witnessing today the triumph of international cooperation and multilateralism which are the core of OPEC values.” After the initial two-month period, overall production cuts will lower to 8 million barrels per day from July to December and then lower to 6 million barrels per day from January 2021 to April 2022.