Reports from the media confirm Russia has agreed to hold talks with Saudi Arabia and other OPEC countries over the decision to cut oil production. For months, countries like Nigeria have been mounting pressure on OPEC to cut production which they hope will boost oil prices. However, bigger producers like Saudi have resisted such cuts opining that other non OPEC oil producers will have to cut production.
Reuters is now confirming that both Russia and Saudi have now agreed to hold talks with a bit to cutting back on production. Reuters report oil futures surged 5 percent after the comments by Nikolai Tokarev, head of Russia’s oil pipeline monopoly Transneft. Brent crude rose $1.61 to $33.40 a barrel, a 5 percent gain, by 12:20 p.m. EST (1720 GMT), after a session low of $30.83. It was also boosted by U.S. demand following a blizzard.
Whilst these is still a long way to go before either side can agree, the intent is enough to make countries like Nigeria really happy about the outlook for oil prices further down in the year. Nigeria’s budget benchmark is at $38 with little room to cut it further down. Nigeria’s external reserve is at multi year lows with its attendant effects on the exchange rate and the economy as a whole. Nigeria will hope that the talks continue successfully and end up with all sides agreeing to scale back on production and the quest for market share.