Nigeria emerged one of the losers yesterday, as OPEC producers reached a consensus not to cut oil production in order to stem the decline in prices.
The consensus to stick to the existing production quota of 30 million barrels a day, of which member countries have been overproducing by 300,000 bpd, is far short of the target of 1 million barrels per day, which analysts believe would be the minimum required to allow oil prices to recover, following a 34 percent slump since mid-June.
OPEC decided here Thursday to maintain its oil output ceiling, Kuwait’s oil minister told reporters, despite a global supply glut that has sent crude prices crashing.
Asked what decision the Organization of Petroleum Exporting Countries had taken following a lengthy meeting of its dozen members, Ali al-Omair said: “No change.”
The 12-nation oil cartel, which is headquartered in Vienna, has opted to leave its collective daily oil output target at 30 million barrels, even after crude prices have plunged by more than a third in value since June.
The OPEC decision sent world oil prices tumbling to fresh four-year lows.
At about 1450 GMT, London’s Brent North Sea crude for January delivery dived to $74.36 per barrel.
New York’s West Texas Intermediate for January slumped to $70.87. Both were low points last seen in late August 2010.
According to analysts, Nigeria needs the price of oil at $ 122.70/b to balance its 2015 fiscal budget. The country produces 2.1 percent of total world output and 5.9 percent of total OPEC output.
“Saudi Arabia and the oil-rich Gulf monarchies can afford to take the long-term remedy,as they have enough cash reserves,” Theodore Karasik, senior adviser at Risk Insurance Management, said. “Libya, Nigeria and Venezuela, on the other hand, needed a quick intervention by OPEC.”
Nigeria’s fiscal troubles are compounded by the fact it has failed to replenish its oil fund after many years of high oil prices, with only $2 billion remaining in its so called Excess Crude Account (ECA).