Nigeria and Iraq have said the strategy employed by the Organisation of Petroleum Exporting Countries (OPEC) and its allies, OPEC+, to gradually raise oil production is enough to balance the market.
Both countries insisted that there was no need for OPEC to be more aggressive, despite crude oil surge this year to almost $100 a barrel.
The 23-nation alliance, led by Saudi Arabia and Russia, would meet on March 2 to decide the next line of action in terms of the amount of oil it expected members to pump in April.
Bloomberg quoted Nigeria’s Minister of State for Petroleum Resources, Timipre Sylva, as maintaining that the international cartel would not need to take any unplanned barrels to the market, stressing that the current plan perfectly serves the market as it is.
Sylva told reporters at an event in Doha, Qatar, according to Bloomberg, “We won’t do anything extraordinary at this time because we are expecting a lot of production from outside of OPEC+.”
He added, “There’s no need at all to bring on more barrels than the current plan. We are expecting more production if a nuclear deal with Iran works out (since) there will be production from them.”
Several of OPEC+’s biggest producers want to continue to add 400,000 barrels a day of crude to the market each month, Bloomberg reported.
In addition, Iraq’s Ihsan Jabbar said OPEC and its partners would make their decision for April at the March meeting, after reviewing fresh data on supply and demand.
The comments came even as Brent crude rose 2.3 per cent to $97.60 a barrel, extending this year’s jump to 26 per cent.
Tuesday’s gain occurred after Russian President Vladimir Putin announced he was recognising two self-proclaimed separatist republics in Ukraine.
Iraq’s energy minister, Jabbar, said OPEC was factoring in growth in output from non-OPEC+ members, such as Brazil and Canada, and did not want to see any increase in commercially-stored oil around the world.
“The market will have more and more oil so we think there’s no need” to deviate from today’s strategy, Jabbar said in an interview in Qatar, where he was attending a natural gas conference, together with Sylva and others.
“We will not create any growth to the commercial storage. We will secure all the demand by making the required supply,” he added.
Russia, a major oil and gas producer, plans to send “peacekeeping forces” to the Ukrainian region in a dramatic escalation of the on-going conflict. Moscow has consistently denied having plans to invade Ukraine.
Some major oil importers have called on OPEC+ to pump faster and put pressure on the likes of Saudi Arabia to use up some of their spare capacity.
Jabbar said it would be “unfair” for any OPEC+ state to raise output beyond its quota, despite many members struggling to reach theirs.
Nigeria has been struggling to meet its OPEC allocation for months and has as much as 300,000 barrels per day deficit, mainly due to ageing upstream infrastructure and sabotage as well as technical reasons.
Despite the over 1.7 million barrels’ output allowed by the organisation, the country has managed to increase production to about 1.4 million, going by the latest OPEC review.
Although there are issues surrounding the sustainability of the current upward trend of the country’s supply to the global market, it is seen as a good sign for the nation’s oil and gas industry.
Last week, the International Agency Energy Agency (IEA), which advises rich countries, said OPEC+ was pumping almost one million barrels a day below its target.
“We have come from the recovery from COVID,” the Iraqi minister said.
“It is not fair that you will give the increase just for some countries,” he added.
Iraq undershot its output target last month because of bad weather at ports, Jabbar said. The country should meet its quota for February of around 4.3 million barrels a day, he noted.
Meanwhile, the Chief Executive of Vitol, one of the world’s biggest oil traders, expects oil prices to climb to $100 and remain at that level for an extended period of time.
This bullish prediction, he said, was driven by a belief that global demand would surge in the second half of the year and could surpass 100 million barrels per day.
On the supply side, he said it was the fear of shrinking spare production capacity and restraint from US shale that was driving oil prices higher. Oil prices will go higher, and they would stay there for an extended period of time, said the chief executive of Vitol, Russell Hardy.
“The 100 million-barrel number is probably going to be exceeded this year,” Hardy told Bloomberg, adding, “Demand is going to surge in the second half.”
According to him, demand for crude this year could surpass 100 million barrels daily.
Like many others, Vitol’s chief executive noted that the imbalance in global oil markets was fuelling inflation and threatening to interfere with the recovery of the global economy from the fallout of the pandemic.
However, more oil does not seem to be coming, as the US and European super majors are focusing on shareholder returns instead of production growth, and national oil companies in the OPEC+ countries are sticking to their original plan of adding 400,000 bpd to total production every month.
“Eventually we’re going to run out of spare capacity. That’s what the market is trying to work out,” Hardy noted.
Major Wall Street banks, including Goldman Sachs, Bank of America, JP Morgan, and Morgan Stanley, had already recently predicted that prices would hit $100 a barrel.
Emmanuel Addeh in Abuja with agency report