On the 1st of June 2021, the Joint Ministerial Meeting of OPEC and its allies, OPEC+ agreed to extend its Apr-2021 commitment to ease production constraints that will see OPEC+ states boost output by 2.0mbpd from May to July 2021. Following the outbreak of the pandemic, OPEC+ members had to adhere to various output adjustments in the face of aggregate demand and supply shocks.
Other notable outcomes included the swing producer decision for Saudi Arabia to continue to take its cuts of 1.0mbpd as it plans to keep markets tight. The newly agreed production output aims to address the increased demand on the back of global economic recovery while also looking to rebalance the market following concerns of a potential supply glut from non-OPEC parties.
There are also relatable concerns towards OPEC+ members like Iran, possibly flooding the market following the potential lifting of sanctions.
With regards to Nigeria, although our current output quota will be capped at 1.5mpd, condensate production estimated at 200kpd – 300kpd would provide support to achieving the FG’s benchmark output of 1.8mbpd.
In addition, oil prices are expected to remain well above the FG’s benchmark of $40.0/b. This will boost post-Covid recovery efforts and support the FGN’s fiscal obligations while strengthening our foreign reserves, currency markets, and economic output.