By Jeph Ajobaju, Chief Copy Editor
Despite cajoling from United States President Donald Trump, the Organisation of Petroleum Countries (OPEC) reduced output by 300,000 barrels per day (bpd) in February to raise prices.
Trump tweeted a call on February 25 for OPEC to ease its efforts to boost prices, which he said were “getting too high”.
According to Reuters, Nigeria – the world sixth largest exporter – reduced output but is exceeding its OPEC target of 1.74 million bpd.
It currently produces 1.78 million bpd.
Output from Egina oilfield reached 150,000 bpd in January, which is expected to boost total production estimated at 2.2 million bpd in 2019.
With production cuts agreed by OPEC, Nigeria’s output is around 1.74 million bpd, excluding extremely light oil known as condensates.
Nigeria produces condensates of 350,000 bpd.
The country is exceeding its OPEC target due to the start-up of Total’s Egina field. Small African producers Gabon and Congo are also pumping more than agreed levels, a survey by Reuters found.
Nigeria argues that the Egina field produces condensate, a type of light oil excluded from the OPEC cuts which only apply to crude.
The Reuters survey included the field based on Total’s listing of it as a crude producer.
The survey tracks supply to the market and is based on shipping data provided by external sources, Refinitiv Eikon flows data and information provided by sources at oil companies, OPEC and consulting firms.
Libyan rise may weaken Nigeria’s
West African crude differentials were steady on February 28 as an industry event in London kept activity muted.
Reuters painted the following picture:
- Sellers of Nigerian crude did not show offers. Qua Iboe was last valued at dated Brent plus $1.80 to $1.90 a barrel.
- The full set of April Nigerian loading programmes has yet to emerge and a trader said there are still unsold barrels for March loading looking for a home.
- Some sellers of Angolan crude, including state oil company Sonangol, are sold out after strong demand for April-loading cargoes.
- Potentially weakening the Nigerian market would be a rise in supply from Libya, where there has been progress towards reopening the country’s largest oilfield, El Sharara.
- Still, the field will remain closed until armed groups leave the site, the head of the state oil company said.
Avoiding glut to raise prices
OPEC oil supply fell to a four-year low in February, as top exporter Saudi Arabia and its Gulf allies over-delivered on the group’s supply pact while Venezuelan output registered a further involuntary decline.
On January 1, OPEC and its allies began new production cuts to avert a glut that could soften prices.
OPEC sources say the deal will go ahead despite Trump’s pressure.
“We are sticking to the plan,” one OPEC source said when asked about Trump’s tweet.
All the 14 OPEC members, including Nigeria, pumped 30.68 million bpd in February, the Reuters survey showed on March 1, the lowest OPEC total since 2015.
The total 30.98 million bpd in January was not revised.
Oil has risen to $66 a barrel after a dip below $50 in December, boosted by lower Saudi output, involuntary curbs in other OPEC countries and the prospect of lower supply from Venezuela after Trump imposed sanctions on its oil industry.
OPEC, Russia and other non-members — an alliance known as OPEC+ — agreed to reduce supply by 1.2 million bpd.
OPEC’s share is 800,000 bpd, to be delivered by 11 members — all except Iran, Libya and Venezuela, which are exempt from cuts.
In February, the 11 OPEC members bound by the deal achieved 101 per cent of pledged cuts, the survey found, up from 70 per cent in January.
Among exempt producers, Venezuelan supply fell, while Iran managed to boost exports despite also being subject to U.S. sanctions.
The latest OPEC+ deal came just months after the group agreed to pump more oil, which in turn partially unwound their original supply-limiting accord that took effect in 2017.
The biggest drop in supply came from Saudi Arabia, OPEC’s biggest oil producer, which pumped 130,000 bpd less than in January.
Saudi supply had hit a record 11 million bpd in November, after Trump demanded more be pumped to curb rising prices and make up for losses from Iran.
OPEC and Saudi Arabia changed course as prices slid on the prospect of oversupply in 2019.
The second-biggest drop occurred in Venezuela after the U.S. imposed sanctions on state oil firm PDVSA in January, slowing exports.
Output in the country, once a top three OPEC producer, has already been in decline for years due to economic collapse.
Kuwait and the United Arab Emirates also delivered larger cuts than required under the deal.
Iraq, a laggard on compliance in the last round of cuts, reduced supply with southern and northern exports edging lower.
Production in Libya was little changed as unrest kept its biggest oilfield, El Sharara, offline for a month.
Iran managed a small boost in supply as some customers increased purchases due to waivers from U.S. sanctions, according to tanker data and industry sources.