Libya, Nigeria Agree To Cap At Less Than 2.8 Million Bpd Total

It looks like OPEC is bringing exempt members Libya and Nigeria into the fold with contributions to the efforts to erase the oversupply, and the two African producers have agreed to cap their production at a collective level less than 2.8 million bpd, according to Iran’s Oil Minister Bijan Zanganeh.

Earlier today, a delegate told Reuters that OPEC talks ended in Vienna on Thursday with an agreement to extend the production cut deal through the end of 2018.

Nigeria’s Oil Minister Emmanuel Kachikwu told the Financial Times on the sidelines of the meeting that OPEC would likely impose some kind of “soft” targets on Nigeria and Libya on the basis of their respective average production this year.

OPEC was discussing ‘soft targets’ of around 1.8 million bpd for Nigeria and 1 million bpd for Libya, and talks continued on how to phrase those numbers as “indicative” and not include them as hard targets in the final OPEC statement, the Nigerian minister told the FT.

Going into the meeting OPEC was expected to review the production numbers and targets of Libya and Nigeria, but according to sources and analysts, it was uncertain whether the cartel would impose quotas or caps on the two African producers due to the still-tentative recovery and possible return of sudden outages due to militancy. Still, some kind of ‘loose’ or ‘soft’ targets were being aired as a possible outcome. Even though Libya and Nigeria have higher production targets than the recent highs of their production at 1 million bpd and 1.8 million bpd, respectively, they face security, technical, and financial constraints in growing production much higher.

Still, the fact that the two African countries agreed to cap at recent highs, not at the higher production targets, is a significant sign that they have been asked or persuaded to contribute to the deal, at least in some form.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• China's EV Plan Could Cause An Oil Price Crash
• U.S. Oil Has One Fatal Weakness
• Vienna Is The Ultimate OPEC Smokescreen