Saudi Arabia Crown Prince, de facto head of the OPEC cartel, held a call with member-country Nigeria as the organization works to deliver production cuts aimed at strengthening global crude markets, according to Bloomberg.
Although it is unusual for the Saudi Crown Prince to call other leaders to discuss OPEC matters, Crown Prince Mohammed bin Salman and Nigerian President Muhammadu Buhari shared a phone call on Monday, as reported by the state-run Saudi Press Agency. They discussed “ways of cooperation to enhance the stability” of the global oil market.
The Organization of Petroleum Exporting Countries and its partners have pledged to reduce oil output by 9.7 million barrels a day — roughly 10% of global supply — to offset the demand losses inflicted by the coronavirus crisis. Yet some members like Iraq and Nigeria, have been rebuked for failing to implement their share of the reduction. However, Nigeria has promised additional curbs to make up for its initial non-compliance. Mele Kyari, group managing director at state-run Nigerian National Petroleum Corp., revealed that some of the cuts were made in early June and the remainder will be executed by mid-July.
Despite the promises, Nigeria’s latest cargo-loading schedules suggest the compensation cuts may not be forthcoming. Ideally, Nigeria is to pump about 1.37 million barrels of crude oil a day next month to meet its OPEC quota and compensate for past under-compliance. Instead, the loading programs show that exports alone amount to 1.38 million in July.
Shipments are scheduled to rise again in August, despite further compensation cuts due that month. Nigeria has regularly failed on its commitments to OPEC+ over the past few years, as it struggles to sustain a weak economy and provide revenue for Africa’s largest population. This time, the country argues that some grades are a type of light oil known as condensate, rather than crude, and thus aren’t subject to OPEC targets.