The price of Brent crude, against which Nigeria’s crude oil is priced, has risen to $68.03 per barrel following the decision of the Organisation of Petroleum Exporting Countries (OPEC) to leave production quotas unchanged.
At the 14th OPEC and non-OPEC ministerial meeting that held virtually on Thursday, ministers approved a continuation of the production levels of March for the month of April, with the exception of Russia and Kazakhstan, which will be allowed to increase production by 130 and 20 thousand barrels per day respectively.
Saudi Arabia also agreed to extend its voluntary one million barrels supply cut till April 2021.
At the meeting, Nigeria was commended for fully conforming with its production quota in January.
“The meeting extends special thanks to Nigeria for achieving full conformity in January 2021 and compensating its entire overproduced volumes,” a statement released at the meeting read.
“The ministers thank the Minister of State for Petroleum Resources, Chief Timipre Sylva, for his shuttle diplomacy as Special Envoy of the JMMC to Congo, Equatorial Guinea, Gabon and South Sudan to discuss matters pertaining to conformity levels with the voluntary production adjustments and compensation of over-produced volumes.”
The ministers also agreed to extend the compensation period for countries that exceeded their supply quota till the end of July 2021.
It also cautioned all participating countries to remain vigilant and flexible given the uncertain market conditions and to remain on the course which had been voluntarily decided and which had hitherto reaped rewards.
Hours after the meeting ended, Goldman Sachs Commodities Research raised its forecast and projected that the price of Brent crude will hit $75 by the second quarter and $80 by the third quarter.
This is a $5 increase from the by the second quarter of 2021.
“OPEC’s supply strategy is working because of its unexpectedness and suddenness,” Goldman said.
“We believe it is now clear that OPEC+ is in fact pursuing a tight oil market strategy, with our updated supply-demand balance pointing to OECD (inventories) falling to their lowest level since 2014 by the end of this year.”