Nigeria and four other troubled nations that are major members of the Organisation of the Petroleum Exporting Countries (OPEC) have experienced unexpected growth in oil supply, which is likely to force the cartel to consider further production cuts, Citigroup Inc has said.
Citigroup’s Head of Commodities Research, Ed Morse, disclosed this in an interview with Bloomberg on Thursday.
He said Nigeria has improved security in the Niger Delta region.
He said the “fragile five countries are Iran, Iraq, Libya, Nigeria and Venezuela.
He stated that they have struggled with output losses and disruptions for the past few years and will add roughly 900,000 barrels a day of production this year and at least the same in 2024.
Ed Morse said, “That’s enough to satisfy coming growth in oil demand. All of a sudden, they are sources of growth, and they will be sources of growth for five, four years — or maybe even longer in the case of Iraq and Venezuela.
“It strikes us that the core OPEC+ countries have a problem on their hands.” Morse further revealed that “The five nations are all showing positive signs of supply recovery, while growth in oil demand will be constrained by fading expansion in China.
“Iranian output has recovered as it sends a flood of exports to China while engaging in tentative diplomacy with the US.
“Iraq may restore supplies when it reaches an agreement on a shuttered pipeline to Turkey and also add capacity. Venezuela is in talks with Washington on easing sanctions, and even Libya, long wracked by instability, has potential for expansion.
“As a result, OPEC leader Saudi Arabia and its Persian Gulf allies — which have slashed production this year to shore up crude prices — may face pressure to cut output further, Morse said.
“The kingdom has already curbed supplies to a two-year low near 9 million barrels a day. It’ll be a big problem.
“I think they’ll have to cut, and I don’t know how easy it is for them to do that.”
Source: newtelegraphng.com
