Oil price rises above $85 after OPEC+ members announce surprise production cut

The Organisation of the Petroleum Exporting Countries and its allies, OPEC+ which includes Saudi Arabia, Iraq and several Gulf states have announced a surprise oil production cut that will exceed one million barrels a day.

The surprise move has helped the price of Brent Crude oil jump by more than $5 a barrel, or 7%, to above $85 as trading began on Monday.

Oil prices soared when Russia invaded Ukraine, but are now back at levels seen before the conflict began.

Saudi Arabia for example has pledge its own 500,000 barrel-a-day supply reduction.

The UAE said it would cut production by 144,000 barrels per day, Kuwait announced a cut of 128,000 barrels per day while Iraq said it would cut output by 211,000 barrels per day and Oman announced a cut of 40,000 barrels per day. Algeria said it would cut its output by 48,000 barrels per day.

Fellow members, including Kuwait, the United Arab Emirates (UAE) and Algeria followed suit, while Russia said the production cut it was implementing from March to June would continue until the end of the 2023.

READ ALSO:OPEC data shows Nigeria now 4th oil producing country in Africa

Nigeria a member of the cartel is yet to announce such decision and more likely will not given that it only recently announced rebound in oil production output after months of increase oil stealing.

It would be recalled that Nigeria’s oil production had risen month-on-month, MoM, by 1.9 per cent to 1.258 million barrels per day, mb/d, in January 2023, from 1.235 mb/d recorded in December 2022. The figures excluded Condensate.

The Organisation of Petroleum Exporting Countries (OPEC) in its February 2023 Monthly Oil Market Report, MOMR, obtained yesterday, however, indicated that on a year-on-year, YoY, basis, the January output was a massive 10 percent drop from the 1.399 mb/d in January 2022.

The report also showed that Nigeria, beat Angola that produced 1.050 mb/d to become Africa’s leading producer while Equatorial Guinea came last with 55,000 barrels per day during the period. Nigeria’s oil output in January 2023 remained significantly short of the 1.8 million barrels per day allocated to the country by OPEC.

In fact recently at the flag off of oil drilling in Nasarawa state, President Buhari promised that the country targets to raise crude oil production to three million barrels per day (3mbpd) from the current 1.7mbpd.

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