Ibe Kachikwu, minister of state for petroleum resources, says that the current deal by the Organisation of Petroleum Exporting Countries (OPEC) to cap output will extend till 2019 if crude prices continue to hover around the $70 mark.
The minister made the projection while speaking on the sidelines of the 7th summit of the Forum on China-Africa Cooperation (FOCAC) in Beijing on Monday.
In December 2016, the oil cartel entered a deal with non-OPEC producers led by Russia to cap oil supply to mop up the oversupply in the market.
Libya and Nigeria were exempted from the output pact to maintain its production output of 1.8 million barrels of oil per day (mbpd).
Kachikwu said most members are comfortable with the current deal and might only be willing to budge if oil prices soar above $80 per barrel or below $65 per barrel.
“There is a whole lot of geo-politics now involved in how the price or volumes are behaving. But I think October right through December, I see that we are probably going to stay steady,” he told Bloomberg.
“We’ve got to see how the market plays out. If come December we find that everything that is working is working well, prices remain in the 70’s, definitely what you’re going to find is everybody will just say “no leave it as it is,” we struggled with that decision in June.
“But if come December prices go up northwards dangerously… you’re probably going to see a loosening up of volumes. If prices go southwards, we’re going to firm up on those.
“How long we keep this going is going to be a balancing act of how well the buoyant prices make up for the loss of volumes.”
OPEC’s joint monitoring committee will meet in September to deliberate on the effectiveness of the current deal and decide on making adjustments or keeping things constant.