According to the Federal Government on Tuesday, the Organization of Petroleum Exporting Countries’ decision to reduce crude oil production by two million barrels was unanimous.
As revealed in a statement that bears the personal signature of Chief Timipre Sylva, the Minister of State for Petroleum Resources, the action was conducted purely for market stabilization purposes and not for any other reason.
He said, “The decision taken by the OPEC+ (meaning OPEC and its allies) during our meeting on October 5, 2022, to voluntarily adjust crude oil production downward by two million barrels per day was unanimous.
“It was taken for the exclusive purpose of ensuring the long-term stability of the oil market. It was purely to balance supply and demand, and forestall a degeneration of the current volatile oil market to a situation where larger production cuts will be required to balance it.
“This proactive decision was based on a thorough assessment of market conditions as OPEC plus has always been guided.”
Members of OPEC and their Russia-led allies had earlier this month agreed on a significant reduction in oil production, a move to support prices that might buttress sanction-hit Moscow’s coffers and irritate Washington.
Nigeria is a powerful OPEC member with daily crude oil production of about 1.4 million barrels, albeit this number has dropped as a result of oil theft and vandalism in the Niger Delta.
At a meeting in Vienna, the 10-member OPEC cartel led by Russia and the 13-member OPEC cartel decided to cut two million barrels per day starting in November.
Since the peak of the COVID-19 epidemic in 2020, this reduction has been the largest.
Inflation, which has reached decades-high levels in several nations and is causing a worldwide economic downturn, might be further exacerbated by such a move, which could boost oil prices.
Additionally, it might strengthen Russia ahead of the European Union’s impending ban on the majority of its crude exports and a move by the group of affluent democracies to control the price of the nation’s oil.
In order to control prices that surged after Russia’s invasion of Ukraine earlier this year, US President Joe Biden personally urged Saudi leaders to increase output in July.
However, diminishing demand worries and worries about a potential global recession have caused petroleum prices to decline recently.
