Nige­ria backs ef­forts to 'sta­bilise' oil mar­ket

The Pak Banker - - MARKETS/SPORTS -

The Nige­rian and Saudi lead­ers sup­ported ef­forts to sta­bilise the oil mar­ket but Africa's top pro­ducer did not com­mit to a pro­duc­tion freeze.

Af­ter talks in the Saudi cap­i­tal Riyadh, Nige­ria's Pres­i­dent Muham­madu Buhari and Saudi King Sal­man "com­mit­ted them­selves to do­ing all that is pos­si­ble to sta­bilise the mar­ket and re­bound the oil price," Buhari's of­fice said in a state­ment. Buhari was in Riyadh a week af­ter Saudi Ara­bia, Rus­sia, Venezuela and Qatar agreed at talks in Doha to freeze pro­duc­tion at Jan­uary lev­els in a bid to stem the dra­matic fall in oil prices.

The agree­ment is con­di­tional on other ma­jor pro­duc­ers join­ing in, as oil heavy­weights seek to en­sure oth­ers do not take ad­van­tage of out­put lim­its to win mar­ket share.

The state­ment af­ter Tues­day's talks made no men­tion of Nige­ria join­ing the freeze but an­a­lysts say the OPEC mem­ber is likely to even­tu­ally sup­port the move.

The of­fi­cial Saudi Press Agency also re­ported that talks be­tween Prince Ab­du­laziz bin Sal­man, the Saudi deputy oil min­is­ter, and his Nige­rian coun­ter­part, ju­nior oil min­is­ter Em­manuel Ibe Kachikwu, fo­cused on "the best way for (mar­ket) sta­bil­ity" and "the co­op­er­a­tion of pro­duc­ing coun­tries in­side and out­side OPEC" to achieve this.

Saudi Ara­bia and its Gulf al­lies in the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries had been re­fus­ing to limit or re­duce pro­duc­tion, lead­ing to a sup­ply glut that has seen prices fall by 70 per­cent since mid-2014.

Poorer OPEC mem­bers, in­clud­ing Nige­ria, have been hard hit by the price drop but even the wealthy Gulf states have been forced to adopt aus­ter­ity mea­sures to cope with fall­ing oil rev­enues.

"I wouldn't be sur­prised to see them voice their sup­port to the freeze agreed in Doha," Ab­hishek Desh­pande, lead oil mar­ket an­a­lyst at Natixis in Lon­don, said of Nige­ria.

But he said that un­less Iraq and Iran also com­mit to limit pro­duc­tion such talks "carry very lit­tle weight".

The two coun­tries are OPEC's se­cond- and third-largest pro­duc­ers.

Iran, re­turn­ing to world mar­kets as sanc­tions are lifted un­der its nu­clear deal, has in­sisted on boost­ing pro­duc­tion to pre-sanc­tions lev­els.

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