Nigeria vies for control of Opec as cartel ponders oil output

Traders who are nervous that the political situation in Iraq spinning out of control want to hear that the world’s largest single exporter is ready to open its spigots in the event of an emergency shutting off supplies elsewhere.

Saudi Arabia has maintained a capacity to pump 12.5m bpd if needed but has instead kept about 2.5m bpd of spare capacity in reserve as an emergency buffer for the market in the absence of reliable production from Libya. Once a major supplier of light, sweet blends of crude to European refiners, Libya is now effectively embroiled in a smouldering civil war that has knocked the North African producer out of the market.

Additional production from Iraq - which falls outside Opec’s quota system - over recent months, has helped to balance supplies. Iraq’s production has broken post-2003 records since the beginning of the year as field developments in the South of the country around Basra have boosted output. Iraq has been producing on average about 3.5m bpd of oil.

However, output gains from Iraq are now threatened by events in Mosul where militant Islamists have seized control of the city of 1m people.

At the same time as it grapples with how to soothe the nerves of world oil markets, Opec is riddled with internal divisions as it looks to nominate a new leadership. Abdulla Salem el-Badri, the group’s long-standing secretary general, had been due to step down two years ago but the group could not decide on a replacement. Iran has for years coveted placing one of its own senior oil officials at the head of the group’s secretariat in Vienna - a move that Saudi Arabia has vigorously opposed.

African oil giant Nigeria has now reportedly thrown its hat into the ring to lead the group. Nigeria and Angola have grown in significance within Opec as their oil industries have experienced rapid growth. Nigeria’s old oil minister Edmund Daukoru had acted as president of the organisation in 2006.

The Wall Street Journal reported ahead of Wednesday's meeting that Abuja is pushing for Petroleum Minister Diezani Alison-Madueke forward as a contender to replace El-Badri but faces resistance from the Arab members.

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