Nigeria agrees to limit future production as OPEC, non-OPEC producers meet

July 24, 2017
The world oil market is making progress toward rebalancing crude oil supply-demand levels, concluded a joint OPEC and non-OPEC Ministerial Monitoring Committee (JMMC). The group met in St. Petersburg, Russia, on July 24.

The world oil market is making progress toward rebalancing crude oil supply-demand levels, concluded a joint OPEC and non-OPEC Ministerial Monitoring Committee (JMMC). The group met in St. Petersburg, Russia, on July 24.

Libya and Nigeria were exempted from the existing production-cut targets. On July 24, Nigeria voluntarily agreed to submit to production adjustments as soon as its output levels sustainably reach 1.8 million b/d, said a JMMC statement.

“The continued strengthening of the global recovery is under way with stability in the oil market remaining a key determinant,” JMMC said. “The market volatility has been lower in recent weeks and investment flows have visibly started to improve,” for oil and gas activities.

Oil demand is expected to increase during this year’s second half, JMMC said in a statement, adding that major producers have a 98% conformity level with the production-cut targets of 1.8 million b/d through first-quarter 2018.

Those production-cut targets took effect in January and were extended earlier this year to 2018 in efforts to support crude oil prices, which have slumped since 2014.

A joint technical committee estimated the 98% rate for both June and for the first 6 months of 2017. The JMMC recommended keeping the existing production-cut targets beyond first-quarter 2018 as an option if additional action is needed to support oil prices.

The next JMMC meeting is scheduled for September unless the group determines that it needs to meet earlier.

The JMMC also said, “Existing oil-market trends are resulting in moderation of future supply growth with the number of new final investment decisions significantly below historic averages.”

Committee members said US shale oil projects are going through slowing well productivity, accelerating inflation, slowing rig-count growth, and constrained capital market access.

Contact Paula Dittrick at [email protected].