by Sanya Ademiluyi
Members of the so-called OPEC Plus consisting mainly of OPEC member states, Russia and Mexico have agreed to cut an unprecedented 10 million barrels per day, oil output in order to shore up falling oil prices,Thursday,April 9,2020. International crude oil prices have tumbled by at least 60 per cent since mid-February this year on the spread of the covid-19 to countries in Europe and the US.
A squabble over market share between Organisation of Petroleum Exporting Countries, OPEC’s biggest producer,Saudi Arabia and Russia ,an OPEC Plus big wig further worsened the glut of oil on the spot markets and
further dipping crude oil prices.
In Nigeria, the covid-19 pandemic took a direct toll on the Nigerian oil exports, as Mele Kyari,Group Managing Director of the state-owned Nigerian National Petroleum Corporation, NNPC declared publicly that 26 cargoes of the country’s oil exported headed for international markets were stranded at sea without willing buyers. India and China are the biggest importers of Nigerian crude oil exports.
At the Opec plus extraordinary meeting ,both Saudi Arabia and Russia as well as Mexico set aside their differences to reach the crucial agreement for an unprecedented 10 million barrels per day production cut by members of the so-called OPEC plus which includes Russia and Mexico. In a few weeks when the newly agreed output cuts kick
in, global oil prices are expected to gain about 20 per cent of its former price of $67 per barrel in mid-February.
Without the agreement ,traders at the Rotterdam spot market had forecast that crude prices for benchmark, brent may drop further $20 per barrel to closer to $10,a price last over a decade ago.
Although the US it not a member of OPEC plus,US President Donald trump enthusiastically welcomed the group’s deal noting the it will save the global oil industry from collapse .It is cheering news for US shale producers at home as lower oil prices of close to $10 per barrel would have rendered their businesses unprofitable.
Few weeks ago, President Trump had talked up oil prices when he urged Russia, Saudi Arabia and Mexico to do all they can to reach an agreement on output cuts.
The oil markets responded to that positive comments when prices rebounded to close to $30 per barrel from its $25 per barrel slump two weeks earlier.
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