The cut, which is about 1.5 per cent of global crude oil supplies of over 300 million barrels per day, was approved during the crucial 178th (Extraordinary) meeting of the OPEC Conference in Vienna, Austria.
The decision is expected to be in force till next June 30, subject to a review depending to changing conditions in the international oil market.
The OPEC said the burden of the cut would shared with non-OPEC allies, led by Russia.
Under the agreement, OPEC said its members will cut a minimum of one million barrels per day from production, while Russia and other members in the non-OPEC group would cut 500,000 barrels.
The agreement is, however, subject to the final approval of members of the non-OPEC during the meeting of the executives led by Russia and other oil-producing countries like Kazakhstan and Oman slated for Friday.
The announcement of the decision did not, however, register much impact in the international oil market, as the negative surge in the oil market remained largely unchanged.
But shortly after the announcement, crude oil prices, especially that of Brent blend produced by Nigeria, declined further by almost one per cent to $50.71 per barrel.
Concerns over the deplorable condition in the crude oil market heightened in the wake the global uncertainty over the impact of the ravaging deadly coronavirus around the world.
OPEC said the spread of the virus has assumed epidemic dimensions, with “a major adverse impact” on economic and oil demand forecasts.
Also, the group said the latest cut was in addition to a subsisting estimated 2.1 million barrels per day cut announced recently, which is expected to run till the end of 2020.
With the latest cut, the implication is that OPEC and non-OPEC members would be cutting almost four per cent of supply from the global market in a bid to strengthen crude oil price and stabilise the market.
Reacting to the latest development, a former director of the Department of Petroleum Resources, Osten Olorunsola, said it presents a very dire situation for Nigeria. He said Nigeria should react with urgency to save the economy from collapse.
“Nigerians crude oil exports were already down as a result of lower production capacity before the coronavirus problem,” he said. “With the latest decision by OPEC to further cut the production of its members, including Nigeria, the government needs to react with urgency to get the economy out of trouble.”
“Apart moving swiftly to conclude the passage of the Petroleum Industry Bill, which is affecting interest of new investors in the oil industry, government must think about holding a fresh oil licencing round to bring in new production. But, the first thing first – the passage of the PIB,” Mr Olorunsola said.
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