Recalcitrant OPEC Members Pitch in to Up Oil Production Curbs, but Nigerian Exports Set to Rise in May

by Ship & Bunker News Team
Thursday March 30, 2017

Although it remains unclear whether the Organization of the Petroleum Exporting Countries (OPEC) will extend their oil output reduction initiative to the end of 2017 as many are hoping, the cartel is maintaining an upbeat tone with news that the United Arab Emirates is playing an active role in the cuts and further boosting compliance.

A Reuters survey shows that the UAE has helped boost OPEC compliance in March to 95 percent, up from an initial February estimate of 94 percent and a record high; it also reportedly provided the biggest reduction in March.

The survey went on to disclose that  Saudi Arabia, Kuwait, and the UAE compensated for the weaker compliance of other members, including Algeria, Ecuador, Gabon, and Venezuela; and it said that Iraq has boosted compliance too, with exports from northern and southern ports falling.

Speaking to Reuters, Mohammad Barkindo, secretary-general for OPEC, said the OPEC and non-OPEC agreement "is gradually, but steadily working its way to restore balance to the oil markets.

"The rebalancing is already underway."

Presumably, Barkindo will be able to capitalize on yet more good news in the form of Russia and Iran continuing cooperation in reducing oil output, according to a joint statement signed by both countries this week.

The 16 page statement was released during talks between Hassan Rouhani, president of Iran, and and his Russian counterpart Vladimir Putin and addresses concerns such as nuclear energy, oil exploration and production, electricity, rail transport, and urban development.

But reality has a knack of intruding on any good news involving OPEC of late, and the stellar compliance combined with the UAE and other nations finally assuming their fair share of the cutbacks could be mitigated by a rise in Nigeria crude exports: according to a loading program compiled by Reuters, the exports are set to rise to 1.66 million barrels per day in May.

Also, even if the can-do spirit of previously recalcitrant OPEC members indicates that an extension of the cutbacks is imminent, it wouldn't do much good in the face of rising production elsewhere in the world: last week, Bill Baruch, chief market strategist at IITrader, warned that even if an extension is ratified, the rise in U.S. shale production alone would wipe out most of its gains: "The U.S. has already taken up two thirds of the OPEC cuts with the remainder of 2017 left."