Karim: OPEC+ output cut to shore up oil prices near term

The global oil market continues to experience volatility as OPEC-plus members, led by Saudi Arabia and Russia, extend voluntary oil output cuts to 2.2 million barrels per day into the second quarter of this year. In a recent interview on CNBC Africa, Kola Karim, the Chairman of Shoreline Group, shared his insights on how these output cuts are expected to provide support to the oil market and stabilize prices in the near term. Karim highlighted the strategic move by Russia to implement an additional 500,000 barrels per day cut, which he believes will help shore up prices and maintain firmness in the market. Despite concerns about global growth and increased output from non-OPEC+ countries, Karim remains optimistic about the impact of these cuts on oil prices. He emphasized that while global economic challenges may suggest a downward trend in prices, the efforts of OPEC-plus to maintain production cuts are likely to stabilize prices in the short to medium term. Looking ahead, Karim discussed the role of Russia in the market and its determination to continue exports despite sanctions and geopolitical challenges. He noted Russia's focus on natural gas and oil exports to key markets like China and India, signaling its commitment to sustain its market share and revenue streams. When considering the demand outlook for the second quarter, Karim projected a price range of $75 to $85 per barrel for crude oil, underscoring the impact of OPEC-plus decisions on price stability. In the context of African oil producers, Karim emphasized the opportunities for countries like Nigeria to leverage the current market conditions and enhance their production capacities. He pointed to Algeria's investments in natural gas and oil production as a model for African nations to follow. Karim urged Nigeria to prioritize infrastructure development and directed investments to increase local refining capacity, particularly with projects like the Dangote Refinery coming online. He envisioned a scenario where Nigeria could significantly boost its production levels to meet domestic consumption needs and potentially exceed current output. Addressing concerns about meeting production targets, Karim expressed confidence in Nigeria's ability to ramp up production, citing efforts by local oil companies to enhance drilling activities and infrastructure. He highlighted the importance of partnerships between government entities like the Nigerian National Petroleum Corporation (NNPC) and local oil companies to drive production growth. Karim also stressed the urgency of addressing divestments in the sector to attract investment and ensure that assets are efficiently utilized to support Nigeria's economic objectives. As the oil market continues to navigate challenges posed by global economic trends and supply dynamics, the actions of key players like OPEC-plus and individual producers will play a crucial role in shaping the future of oil prices and market stability. With a focus on strategic decision-making, infrastructure investments, and operational efficiencies, oil-producing countries can seize opportunities in the evolving energy landscape.