Nigerian minister: Oil is oversupplied

18/02/2009

There is still an oversupply of oil on the market despite swathing cuts to output imposed by the Organisation of the Petroleum Exporting Countries (Opec) since September last year.

Such is the claim of Nigeria's oil minister Odein Ajumogobia, who has told Reuters that the cartel will need to monitor members to ensure that they are complying with the production cuts.

In a bid to put a stop to the slide in crude prices witnessed since the onset of the financial crisis, Opec members have vowed to cut production by some four million barrels a day.

Estimates recently obtained by Reuters surmise that in reality, production has fallen by around two-thirds of this.

"I understand there hasn't been full compliance yet. So it may just be a directive to ensure compliance," he said.

He added that members are unanimous in their realisation that there has been a "destruction in demand" in the last six months.