In a move that would trigger a crisis in global oil markets, Nigeria could be on the brink of walking out of Opec.
In a move that would trigger a crisis in global oil markets, Nigeria could be on the brink of walking out of Opec.
Sources close to the 11-member oil cartel say Nigeria, its fifth-biggest producer, could threaten to resign as soon as Opec's next scheduled meeting in September. That would in turn produce a level of internal discord not experienced for decades and could, says one analyst, "threaten the organisation's very existence".
The issue has arisen from Nigeria's growing barrel production ambitions. Each member is supposedly bound by a quota set when the cartel meets and calculated to keep oil markets stable.
Not only does Nigeria – along with some other members – have an undisciplined history of over-production against those quotas, it is now pursuing opportunities that will raise national output still further. Observers have commented that Nigeria's possible use of spare capacity "would appear to represent flagrant disregard for the current structure of quotas".
As Bank of America oils analyst Richard Savage explained, Nigerian capacity expansion plans have set it on a collision course with Opec, and leaving the cartel is emerging as a likely option.
"Nigeria's opportunities for the rapid expansion of its oil industry represent the most significant threat to Opec unity for at least five years and potentially since the oil price crisis of 1986," he said.
"To think that Opec's second tier would be thrown into battle for market share ... conjures up a nightmarish picture of fractious debate and oil market destabilisation."
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