'Not interested!' Oil price stays low as Mexico pulls out

The oil price, expected to leap over the G20 output cut remains low at $26.40 per barrel, as Mexico declined to be part of the initiative targeted at supporting the Organisation of Petroleum Exporting Countries (OPEC) to achieve market stability.

A survey of the London market by Vanguard over the weekend showed that the price of Bonny Light, Nigeria’s premium oil grade stood at $26.40 while the prices of Brent and OPEC Basket stood at $31.48 and $21.19 respectively.

Under the oil cut deal, OPEC and partners look forward to cutting 10 million barrels per day between May and June 2020, 8 million barrels per day between July and December 2020, and 6 million barrels per day from January 2021 to April 2022, respectively.

According to plan, Mexico was expected Mexico to cut 400,000 barrels per day, bpd from May to June 2020, but President Andrés Manuel López Obrador said the nation can only cut 100,000 bpd, even though the United States, Canada, and other G20 nations have thrown their weights behind the OPEC+ group of countries.

However, in a statement sent to Vanguard, the African Petroleum Producers’ Organization (APPO), which Nigeria remains a member, disclosed that it has, “followed with keen interest the Meeting of the OPEC+ or Declaration of Cooperation Partners which held on Thursday 9th April 2020 and the Meeting of the G20 Energy Ministers which held yesterday Friday 10th April 2020 aimed at halting and reversing the unprecedented volatility that came to characterize the global oil market since the beginning of March 2020.

“We commend participants at the two meetings for the commitment they demonstrated to finding a solution to a problem that would have had serious repercussions to the global economy both now and in the medium and long terms. The decision of OPEC+ to adjust crude oil production by 10 million barrels per day with effect from 1st May 2020 till 30 June 2020 and thereafter 8 million barrels per day to the end of the year 2020 and 6 million barrels per day till end of April 2022 is a significant step in halting the speed at which the global oil industry was heading for total collapse.

“We also commend the G20 energy Ministers for keying into the laudable initiative of the OPEC+ by committing to take all necessary and immediate measures to ensure energy market stability. Although not expressly stated, we believe that the necessary measures include an adjustment in crude oil production.

“In the spirit of cooperation and burden-sharing, and recalling our Communique of 9th April 2020 expressing our support to OPEC and Non-OPEC Member Countries as well as other oil producers in their concerted efforts at bringing back stability to the global oil market, APPO Member Countries who are not in the OPEC+ have also committed to contributing to the global efforts at stabilizing the oil market, by effecting adjustments on their daily productions. Details of the adjustments will be communicated to the OPEC Secretariat as soon as possible.”

Similarly, Nigeria has agreed to produce 1.412 million barrels per day, 1.495 million barrels per day, and 1.579 million barrels per day respectively for the corresponding periods in the agreement; as against the 1.829 million barrels per day of dry crude oil that was the reference production in October 2018.