By Anthony Isaac
Mexico has finally bowed to pressure by agreeing to join efforts with crude oil producers to reduce production that will shore up prices at the international market.
A deal initiated by Saudi Arabia-led OPEC and Russia-led non-OPEC oil producers last Thursday faced uncertainty following the refusal of Mexico to sign the agreement.
But in a follow-up meeting on Sunday, the group agreed to cut production by 9.7 million barrels per day.
A statement by Nigeria’s Minister of State Petroleum Resources, Chief Timipre Sylva in Abuja attributed the success of the meeting to the pressure put on Mexico by the USA.
Sylva said: “On Easter Sunday, April 12th, 2020, Nigeria joined its other OPEC+ counterparts to bring into effect the agreement to cut 9.7 million barrels of supply following the alignment of Mexico.
“The intervention of the United States of America resulted in Mexico agreeing to a cut of 100 KBOPD and to be complemented by an additional 300 KBOPD by US Producers.
“This will enable the rebalancing of the oil markets and the expected rebound of prices by $15 per barrel in the short term. This also promises an appropriate balancing of Nigeria’s 2020 budget that has been rebased at $30 per barrel”.
He explained that “as agreed, Nigeria will join OPEC+ to cut supply by 9.7 million barrels per day between May and June 2020, 8mbpd between July and December 2020 and 6mbpd from January 2021 to April 2022, respectively.
“Based on reference production of Nigeria of October 2018 of 1.829 million barrels per day of dry crude oil, Nigeria will now be producing 1.412 million barrels per day, 1.495 million barrels per day and 1.579 million barrels per day respectively for the corresponding periods in the agreement.
“This is in addition to condensate production of between 360-460 KBOPD of which are exempt from OPEC curtailment”, he added.
The new deal which is just short of the 10mbpd planned cuts will also see additional production cuts of about 3.7mbpd from USA, Canada and Brazil.
The demand for oil has fallen drastically, selling for $18 per barrel last week as a result of the global outbreak of the Coronavirus, which has led to over 100,000 deaths around the world, with USA and several European countries the most affected.