OPEC fails to agree on output policy as Niger Delta boils
In the face of destruction of oil and gas infrastructure in the Niger Delta region of Nigeria, OPEC again failed to agree on output policy.
The cartel could not agree on the exact volume to be pump into the market because of the intense rivalry that exists between Saudi Arabia and Iran, which is insisting on the right to raise production steeply. Due to this disagreement, the price of crude is now down by 1.2 percent as it now sells for $48 a barrel.
Tensions between the Sunni-led kingdom and the Shi’ite Islamic Republic have been the highlights of several previous OPEC meetings, including in December 2015 when the group failed to agree on a formal output target for the first time in years.
In a rare compromise, OPEC unanimously appointed Nigeria’s Mohammed Barkindo as its new secretary-general after years of friction over the issue.
However, despite the deployment of troops to the Niger Delta to curtail the growing attacks on oil and gas facilities by militants, the Niger Delta Avengers (NDA), in the early hours of Wednesday blew up two more oil wells operated by Chevron Nigeria Limited in Delta State.
The incident affected Egbema creek in Warri North Local Government Area of the state. The Bibi oil well RMP 23 and RMP 24, which were severely affected, are considered to be some of Chevron’s most prolific onshore oil wells in the western Niger Delta.
NDA, which had claimed responsibility for several attacks on oil installations in the wake of recent hostilities in the region, also claimed responsibility for the attack via Twitter.
Because of this, the Nigerian daily oil production has been severely affected as it has dropped to about 1.4 million barrels per day.
Saudi Arabia and its Gulf allies had tried to propose OPEC set a new collective ceiling in an attempt to repair the group’s waning importance. But Thursday’s meeting ended with no new policy or ceiling amid resistance from Iran.
Despite the setback, Saudi Arabia moved to soothe market fears that failure to reach any deal would prompt OPEC’s largest producer, already pumping near record highs, to raise production further to punish rivals and gain additional market share.
“We will be very gentle in our approach and make sure we don’t shock the market in any way,” Khalid el-Falih, Saudi energy minister, told reporters.
“There is no reason to expect that Saudi Arabia is going to go on a flooding campaign,” Falih said, when asked whether Saudi Arabia could accelerate production.
The market has grown increasingly used to OPEC clashes over the past two years, as political foes Riyadh and Tehran fight proxy wars in Syria and Yemen.
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