President Muhammadu Buhari and his Saudi Arabian counterpart, King Salman Bin Abdul-Aziz in Riyadh, have backed efforts to stabilise the global oil market.
The agreement was reached after the two leaders held bilateral talks during which they had extensive discussions on regional and global issues.
According to a statement signed by the President’s Senior Special Assistant on Media and Publicity, Mallam Garba Shehu, Buhari and his host accepted the fact that their countries’ economies were tied to oil and that wellbeing of both countries will be in jeopardy with instability in the world oil market.
But, Buhari made no commitment to a production freeze in the talk that was held in Riyadh, the Saudi capital.
“President Buhari and King Salman committed themselves to doing all that is possible to stabilise the market and rebound the oil price,” Shehu said in the statement.
Buhari, who arrived in Riyadh Monday night, is in the oil-rich country 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 free fall in oil prices.
The agreement is conditional on other major producers joining in, as oil heavyweights seek to ensure that 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.
A report in the AFP said the official Saudi Press Agency (SPA) also reported the talks between Saudi’s Deputy Oil Minister, Prince Abdulaziz bin Salman and Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu.
The talks, the report said, centred on “the best way for (market) stability” and “the cooperation of producing countries inside and outside OPEC (Organisation of Petroleum Exporting Countries)”.
Saudi Arabia and its Gulf allies in the oil cartel had been refusing to cut production, leading to a supply glut that has seen prices fall by 70 per cent 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.
He said that unless Iraq and Iran also commit to limit production such talks “carry very little weight”.
The two countries (Iraq and Iran) 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.
“Some neighbouring countries have increased their production over the years to 10 million barrels per day and export this amount, then say let’s all freeze our oil production,” Iranian Oil Minister, Bijan Zanganeh said yesterday.
“They freeze production at 10 million bpd and we freeze at one million bpd. This is a very funny joke,” Zanganeh said.
Saxo Bank analyst Christopher Dembik told AFP that Nigeria’s position is “a bit ambiguous,” supporting the mooted freeze but at the same time wanting to increase its production to respond to domestic market needs.
“In the longer term, there is no reason why the country (Nigeria) won’t align itself with the position of Saudi Arabia and Russia,” Dembik said.
Nigeria and Saudi Arabia would also discuss their position towards Iran and Iraq, he added.
“Nigeria could have a crucial role in this respect because of its measured position” that Iran and Iraq should elevate their production before envisaging freezes, Dembik said.
He went on: “It is probable, then, that Nigeria, meanwhile establishes a bridge for negotiations, notably between Riyadh and Tehran.”
According to OPEC’s Monthly Oil Market Report, Iraq produces about 4.4 million barrels a day, followed by Iran at more than 2.9 million.
Saudi Arabia’s output is close to 10.1 million barrels a day, according to last month’s (January) data.
Kachikwu, who doubles as the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), also discussed joint oil and gas investments during his meeting with Abdulaziz, the SPA reported.
Oil prices nudged higher yesterday as the two OPEC members met.
United States (U.S.0 benchmark West Texas Intermediate crude for delivery in April was up one cent at $33.40 a barrel. Brent North Sea crude for April rose 18 cents to $34.87 compared with Monday’s close.
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