Minister for State for Petroleum, Ibe Kachikwu is obviously one man under pressure. He has been trying to midwife an emergency meeting between OPEC members like Venezuela and Angola who are looking for desperate solution to the falling price of oil and richer producers like Saudi Arabia who will rather continue with the Kamikaze strategy of trying to jealously guarding market share even if it means lower prices.
Over the weekend he was interviewed by Reuters about chances of an emergency meeting taking place anytime soon. He reiterated that the time is not yet right to broker a meeting but agreed once had to happen very soon. “We haven’t been sure that if we held those (emergency) meetings that we could actually walk away with some consensus,”
What he however said about OPEC strategy to crowd out shale producers appears to be an admission that things are probably not working.
“A lot of barrels are tumbling out of the market from non-OPEC members, so the Saudi philosophy is obviously working. But it’s not influencing the price higher, which means that whether we like it or not some barrels are coming in from … members and non-members to cover whatever is dropping out.”
The above statement suggests that whilst there might be justifications for the Saudi led plan it is not leading to higher prices or lower oil supplies. Even as some non-OPEC members cut production due to lower oil prices, we sill have other producers who are pumping more oil. Analysts opine that for some producers, oil price may have to come down to as low as $20 to get them to stop production completely. This admission therefore exposes Nigeria’s precarious place in the scheme of things. With the exchange rate dropping to as low as N330 at the back market and supplies thinning out at the inter-bank market, the CBN is hanging on a tight rope and could well buckle into agreeing to devalue.