Nigerian government has expressed willingness to go along with Saudi Arabia in the initiative to limit oil output to push up prices in the global market. While receiving the Saudi Arabian minister of state for African Affairs and special envoy of the King Salman bin Abdulaziz, Nigeria’s president, Muhammadu Buhari, said that although output cuts had always been difficult for Nigeria considering its peculiar circumstances of large population, huge expanse of land and state of under-development, Nigeria “will cooperate.”
He promised to speak with the minister of state for petroleum, and call for the latest production figures. “I know that it is in our interest to listen. We will cooperate,” Buhari said, stressing that higher oil prices would make both nations stronger and their citizens more prosperous. The Nigerian leader commended the Saudi monarch for his leadership in global oil matters, assuring that Nigeria would continue to accord respect to the Kingdom in that regard.
Oil prices hovered around 2019 highs last Thursday, bolstered by OPEC-led supply cuts and U.S. sanctions on Venezuela and Iran, but were capped by slowing growth in the global economy. U.S. West Texas Intermediate (WTI) crude oil futures were at $57.17 a barrel at 1320 GMT, 1 cent above their last settlement, and close to a 2019 high of $57.55 reached the previous day.
Brent crude futures were down 4 cents at $67.04 after touching a 2019 peak on Wednesday at $67.38. Oil prices have been driven up this year by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).
OPEC and its de facto leader Saudi Arabia agreed late last year, along with producer allies such as Russia, to cut output by 1.2 million barrels per day (bpd) to prevent a supply overhang from growing. OPEC member Nigeria signalled on Wednesday that it would limit output after its production climbed in January. “Willingness of the OPEC+ group to adhere with the output cut agreement will remain supportive of oil prices in the run-up to their scheduled April meeting,” said Abhishek Kumar, a senior energy analyst at Interfax Energy in London. “Sharply declining oil output from Iran and Venezuela will further prompt bullish sentiment in the market.”
U.S. sanctions have hit Iranian and Venezuelan crude exports while unrest has curbed Libyan output. However, analysts said that a global economic slowdown – signs of which emerged late last year – was preventing prices from surging beyond highs reached this week. “Slowing economic growth will invariably lead to weakness in fuel consumption, thus eroding bullish gains for oil prices,” said Benjamin Lu of brokerage Phillip Futures in Singapore.
Talks between the United States and China to resolve a trade dispute which has helped to dent global growth may be progressing, though. The two sides have started to outline commitments in principle on key points of contention, sources familiar with the negotiations told Reuters.
The main factor keeping oil prices from rising even further is soaring U.S. output, which rose by more than 2 million bpd last year to a record 11.9 million bpd. The swelling production has resulted in rising U.S. oil inventories. U.S. crude oil stocks rose by 1.3 million barrels to 448.5 million barrels in the week to Feb. 15, according to a weekly report by the American Petroleum Institute on Wednesday. Official oil inventory and production data are due from the U.S. Energy Information Administration (EIA) after 1800 GMT on Thursday.