Despite the oil cut initiative of the Organisation of Petroleum Exporting Countries, OPEC, and non-OPEC members, the price of Bonny Light, Nigeria’s premium oil grade only rose marginally from $23.19 to $23.25 per barrel, yesterday.
The prices of other crudes, including Brent and OPEC Basket also remained low at $32.05 and $21.19 per barrel respectively.
Investigation by Vanguard showed that it would take a much longer time for the market to respond to the oil cut as the market was saturated with excess oil from many nations, including Mexico, which has already opted out of the accord.
Moved to tackle the prolonged instability in the market, the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting held via video conference, on Sunday, April 12, 2020, had agreed to, “Adjust downwards their overall crude oil production by 9.7 mb/d, starting on May 1, 2020, for an initial period of two months that concludes on June 30, 2020. For the subsequent period of 6 months, from July 1, 2020 to December 31, 2020, the total adjustment agreed will be 7.7 mb/d.”
The Meeting also agreed that this “will be followed by a 5.8 mb/d adjustment for a period of 16 months, from January 1, 2021 to April 30, 2022. The baseline for the calculation of the adjustments is the oil production of October 2018, except for the Kingdom of Saudi Arabia and The Russian Federation, both with the same baseline level of 11.0 mb/d.”