The Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) have agreed to cut the supply of crude oil by 9.7 million barrels.
This comes after US oil producers intervened to complement Mexico’s quota of the supply cuts.
Mexico had rejected its 23% share of supply cuts which had translated to 400,000 barrels per day saying it could only cut back 100,000 barrels.
At the meeting on Sunday, US oil producers agreed to cut 300,000 barrels per day to meet Mexico’s quota.
According to Timipre Sylva, the minister of state for petroleum resources, Nigeria’s production would be down to 1.412 million barrels per day.
The 9.7 million barrels per day cut is scheduled to last for two months; May and June 2020.
For the subsequent six months, from July to December 2020, producers agreed to adjust the cuts to eight million barrels per day.
It would then be followed by a six million barrels per day adjustment for 16 months running from January 2021 to April 2022.
Sylva said the agreement is expected to result in a price rebound of $15 per barrel in the short term.
This also promises an appropriate balancing of Nigeria’s 2020 budget that has been rebased at $30 per barrel.
“Based on reference production of Nigeria of October 2018 of 1.829 Million Barrels per day of dry crude oil, Nigeria will now be producing 1.412 million barrels per day, 1.495 million barrels per day and 1.579 million barrels per day respectively for the corresponding periods in the agreement.
“This is in addition to condensate production of between 360-460 KBOPD of which are exempt from OPEC curtailment.”