Rising oil production in Libya and Nigeria is raising concerns about OPEC’s ability to boost crude prices, but potential conflicts in the two nations may still keep a lid on their output, CNBC reports.
Both OPEC members are exempt from the cartel’s deal to remove 1.2 million barrels a day from the oil market in the first six months of this year. But with OPEC poised to extend the agreement at least through the rest of 2017, the conflicts that sidelined Libyan and Nigerian crude supplies appear to be easing.
Goldman Sachs said rising Libyan and Nigerian production is one factor that is capping oil price gains, even as top producers Saudi Arabia and Russia push to extend OPEC’s output cuts into 2018. The International Energy Agency, a Paris-based energy advisor, issued a similar warning on Tuesday, saying “any significant increase” in Libya and Nigeria production “clearly offsets cutbacks by other OPEC and non-OPEC countries.”
In Nigeria specifically, the peace that has taken hold is fragile as RBC Capital Markets lists Nigeria at its highest geopolitical risk level, due to “the potential for a turbulent political transition,” given President Muhammadu Buhari’s current fragile state of health. However, despite concerns about growing oil supply, there is no sign yet that OPEC will push Libya and Nigeria to turn off the tap when they meet next week.