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Oil price drops to $53.82 as OPEC, others struggle to stabilise market

THE price of crude oil has crashed from $57.00 to $53.82 in the international market as the Organisation of Petroleum Exporting Countries, OPEC and others struggle to achieve stability.

A survey of the market by Vanguard, yesterday showed that the price of Brent, WTI, and OPEC basket yesterday, stood at $53.00, $45.49 and $53.92 per barrel respectively.

The market situation was attributed to over-supply from major oil producers and exporters that are not involved in OPEC, Non-OPEC oil cut accord.

The development is expected to impact negatively on Nigeria’s 2019 budget which has already adopted $60 per barrel as its benchmark.

A renowned energy analyst, Mr. Bala Zaka said in a telephone interview with Vanguard that the Federal Government was too ambitious to emerge with the $60 per barrel benchmark for the 2018 budget.

He said: “I expected the government to go below $50 because from the way things are going, the price of oil may not go beyond $70 per barrel next year.

“Consequently, the proposed $60 is not realistic. It is good for us to have surplus than deficit in the course of budgeting. This is mainly because deficit brings stress and unnecessary panic. But there is always no harm to have surplus.”

In his recent presentation – OPEC and its role in oil market stabilization –   sent to Vanguard, OPEC Secretary General, OPEC, HE Mohammad Sanusi Barkindo, disclosed made to stabilise the volatile market.

He stated: “Twenty-four (now twenty–five) oil producing nations agreed at the first OPEC and non-OPEC Ministerial Meeting held on the 10th of December 2016 in Vienna, on a concerted effort to accelerate the stabilization of the global oil market through voluntary adjustments in total production of around 1.8 million barrels per day.

“What would become clearer in time is that one of the greatest inherent strengths of the ‘Declaration of Cooperation’ was its flexibility, grounded on the core principles of equity, fairness and transparency. Over the last two years, the partners have been able to modify course depending on conditions in the market. When the market appeared skewed to oversupply, we have reacted accordingly, and equally, when consumers expressed concerns regarding demand outpacing supply, the partners in the DoC have taken appropriate action.


“This was best exemplified by the decisions of the 174th OPEC Conference, 22 June 2018, and the 4th OPEC and Non-OPEC Ministerial Meeting, 23 June, where participating countries decided to strive to adhere to the overall conformity level, voluntarily adjusted to 100%. Therefore the DoC should be viewed as an adaptable toolkit to address imbalances in the market.

“The most recent iteration of this ongoing undertaking occurred on 6th and 7th December at the 175th Meeting of the OPEC conference and the 5th Ministerial Meeting of OPEC and non-OPEC. Following extensive analysis and deliberations on the immediate oil market prospects and, in view of a growing imbalance between global oil supply and demand in 2019, the partners decided to adjust the overall production by a combined 1.2 mb/d, effective as of January 2019 for an initial period of six months.

“If I was to use a single word to describe the impact of this cooperation on the oil market, it would be: transformative. A long-absent element of stability has been reintroduced. There have been significant changes in industry-wide and public perceptions of OPEC. The Organization has ably demonstrated its credentials as a body committed to international cooperation, working with other producers, honouring its commitments and promoting mutual respect among all nations.”

It added: “Bringing together 25 sovereign producing nations is unparalleled in the history of the oil industry. The enhanced relations between participating countries now constitute a fundamental and essential feature of the ‘new world of energy.’


He said: “Throughout this entire process, the partners have solicited and responded to the views and concerns of producers and consumers. We have championed consumer and producer dialogue, benefiting from the tremendous partnership with the IEF. OPEC’s energy dialogues with the EU, Russia, China, India and independent suppliers have further harnessed information exchange and fed into our joint strategies. The partners have been responsible and responsive; proactive and professional; adroit and adaptive.”