Page 42 - Nigeria one mag en-21

An overview of the OPEC oil cuts vis-à-vis Nigeria’s production and

Saudi Arabia’s agreement with OPEC

Oïl pump jack with flag of OPEC

The organization of Petroleum the world and the noticeable to about a 5.8million bpd, the
Exporting Countries (OPEC) increase in crude oil prices. At United Arab Emirates (UAE)
began to make huge oil pro- the recent meeting of OPEC and Saudi Arabia were in dis-
duction cuts in early 2020. This and its allies, which was held agreement over production vo-
was due to concerns that an virtually on 18 July 2021, OPEC lumes, sparked by UAE’s rejec-
economic slowdown would cre- proposed a further reduction tion of the Saudi-led deal to
ate an excess in the amount of of the production of 0.4 mil- raise production beyond the li-
crude oil supply and the fact lion bpd monthly starting Au- mit set for early 2022. While
that the demand for crude oil gust 2021. Saudi Arabia and the UAE both
further reduced, owing to the The decision to continue to re- endorsed raising the produc-
COVID 19 pandemic. duce the agreed production tion output, the UAE opposed
The decision led to oil produc- cut is a signal that the econo- extending the existing deal
tion cuts by OPEC of 7.2, 7.13, my is recovering from the from April 2022 until Decem-
and 7.05 million barrels per impact of the COVID 19 pande- ber 2022, unless it was granted
day (bpd) as of January, Feb- mic and the demand for crude a higher production quota.
ruary, and March 2021. In Ap- oil and its product is increa- The disagreement, which cau-
ril 2021, OPEC released a pro- sing. We can only hope that sed a fluctuation in global oil
duction quota that eased the this trend remains the same prices, was finally resolved
target production cuts by 1.14 considering the new COVID 19 when the UAE came to a con-
million barrels per day from variant and its impact on cou- sensus with Saudi Arabia, the
May through July 2021. The ntries around the world. de facto leader of OPEC in July
production cuts were reduced On a separate note, amid 2021. The parties reached a
to 6.55, 6.20, and 5.76 million OPEC production cuts of al- provisional compromise that
bpd in May, June, July. This de- most 10million barrels per day was subject to approval at a yet
cision was in response to the in 2020 and a gradual relaxa- unscheduled meeting of the
gradual recovery across tion of production cuts cartel and the OPEC.

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