…Observers say it shows boost in demand
Price of crude oil peaked at $49.25/barrel in the international market, coming to sector players in Nigeria as good news as it was considered as evidence of a boost in demand as nations get around the COVID-19 pandemic.
Observers note the price last Friday is the highest level since March 5, 2020. The latest price is coming a day after major producers agreed to ease their oil output cuts next year more gradually than previously planned — giving a fragile market more time to absorb the extra supply.
Brent crude, the international benchmark for Nigeria’s crude, gained a 1.13 percent increase, while the West Texas Intermediate (WTI), the United States crude benchmark, was up by 1.03 percent at $46.06.
Experts described the latest increase in crude oil price as good news for Nigeria, crude oil sales accounts for a bulk of the government’s income and about 90 percent of Nigeria’s foreign exchange earnings.
With this development, the foreign exchange scarcity challenge will ease a bit, even as Nigeria struggles to recover from the scathing effects of the COVID-19 pestilence and a second recession.
The Organization of the Petroleum Exporting Countries plus (OPEC+), a group of non-OPEC countries which export crude oil, on Thursday agreed to ease oil-output cuts next year after almost a week of high negotiations that exposed a new rift at the heart of the cartel.
The group agreed to add 500,000 barrels a day of production to the market in January, and ministers will then hold monthly consultations to decide on the next steps.
That’s a much shorter time frame than OPEC+ usually operates under, and before this week the expectation had been that the group would hold off putting more oil onto the fragile market for another three months.
By Chibisi Ohakah, with agency reports