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Challenge for Opec as output deal shows signs of unravelling

Challenge for Opec as output deal shows signs of unravelling

It's no secret that the production cuts initiated in January by the Organization of Petroleum Exporting Countries (OPEC), Russia and their allies have done little to raise the price of crude oil.

The U.S. West Texas Intermediate crude September contract was at $46.22 a barrel by 7:05AM ET (1105GMT), up 45 cents, or around 1%.

Brent crude oil futures plunged 1.24 dollar or 2.52 percent to close at USD 48.06 a barrel at NYMEX.

The current state of oil prices are in conundrums, the continued growth in oil production and stocks is still the main reason for the massive dip, most especially US' growing oil production.

President Muhammadu Buhari presented the 2017 Appropriation Bill to the National Assembly on December 14, 2016, with projected oil revenue at N1.99 trillion, on price benchmark of 42.5 dollars per barrel.

Saudi Arabia and Russian Federation are the de facto leaders of the deal and collectively bear the largest load.

Russian Federation is not opposed to the idea of having its oil export monitored under the Organization of the Petroleum Exporting Countries (OPEC) oil production cut deal, Novak said. It culminated last week with tanker-tracking firm Petro-Logistics reporting that OPEC output rose above 33 million barrels a day this month, up 145,000 barrels a day from a month ago.

Still, oil prices remain under pressure, said Tony Headrick, energy market analyst at CHS Hedging LLC in Inver Grove Heights, Minnesota.

The committee's statement made little reference to Libyan production gains, but said Nigeria would be willing to cap production as soon as it reached 1.8 million barrels per day.

Saudi Energy Minister Khalid al-Falih said the kingdom's exports would fall to 6.6 million bpd in August as demand at home was rising, effectively representing a cut of 1 million bpd year-on-year.

Al-Marzouq also told reporters that a technical committee of OPEC and non-OPEC countries was happy with reports from Libya and Nigeria, and that discussions would continue on Monday.

Analysts have warned that any new production cuts from OPEC would likely just help American shale producers.

For example, OPEC's production fell by 920,000 barrels a day from October to June, according to the International Energy Agency.

Nigeria and Libya were exempted from these limits to give their oil industries a chance to recover to levels seen before years of unrest gripped both nations.

Oil Minister, Ibe Kachikwu, had said that the country was deliberating on whether to join the OPEC cuts and how soon it could.

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