Oil price drops to $57 as Saudi cuts production

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The price of crude oil, yesterday, hovered around $57.00, after hitting $58.00 on Saturday in the international market, as Saudi Arabia cuts output by 500,000 barrel per day, bpd. Oil money Specifically, the price of many light crude, including Nigeria’s Bonny Light stood, at $53.06, while the price of Brent, West Texas Intermediate, WTI and the Organisation of Petroleum Exporting Countries, OPEC, basket of 15 crude stood at $57.06, $47.96 and $52.95 respectively.

The latest oil price showed over $6.00 below the $60.00 per barrel benchmark of Nigeria’s 2019 budget. The price which rose as high as $85 per barrel in October, 2018, dropped to less than $50.00, thus threatening the implementation of the budget, before leaping to the current level.

President Muhammadu Buhari had, while presenting the budget to the National Assembly, said: “The 2019 Budget proposal is intended to further place the economy on the path of inclusive, diversified and sustainable growth in order to continue to lift significant numbers of our citizens out of poverty. The underlying drivers of the 2019 revenue projections have been adjusted to reflect current realities.”

Meanwhile, a source in OPEC, who preferred not to be named because he was not permitted to speak, expressed hope that stability was about to return to the volatile market, as a result of the efforts of OPEC and non-OPEC members.

In a recent statement, OPEC had stated: “Accordingly, the 5th OPEC and non-OPEC Ministerial Meeting, following deliberations on the immediate oil market prospects and in view of a growing imbalance between global oil supply and demand in 2019, hereby decided to adjust the overall production by 1.2 mb/d, effective as of January 2019 for an initial period of six months.

“The contributions from OPEC and the voluntary contributions from non-OPEC participating countries of the ‘Declaration of Cooperation’ will correspond to 0.8 mb/d (2.5 per cent), and 0.4 mb/d (2.0 per cent), respectively. “The JMMC was requested to monitor the fair implementation of the above mentioned resolution and report back to the Meeting.

The meeting emphasized the support and commitment of all participating countries in the ‘Declaration of Cooperation’ to build on the success achieved thus far, through further institutionalizing the framework for regular and lasting cooperation under the draft Charter of Cooperation between Oil Producing Countries, which was endorsed in principle and to be finalized and ratified by the participating countries.” ALSO READ: Qatar to withdraw from OPEC, focus on gas exports

“The Meeting also noted that the ‘Declaration of Cooperation’ remains open to all producers. The Meeting extended its deep appreciation to the Joint Ministerial Monitoring Committee (JMMC), the Joint Technical Committee (JTC) and the OPEC Secretariat for their continued support since the 4th OPEC and non-OPEC Ministerial Meeting on 23 June 2018.

“This included their analysis and recommendations, as well as their constructive and effective engagement in ensuring that the voluntary productions decisions were implemented in a timely and equitable manner.”

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