Nigeria Crude Oil Prices
Global Oil Prices

Crude oil prices rallied to $70.43 last week Friday, ending the week bullish for the first time since November 2018. This means Brent closed last week 2.9% higher. Meanwhile, oil prices maintained its bullish run yesterday, as it closed at $70.76 a barrel.

Brent oil prices rose, as expectations of tight global supply outweighed pressure from rising U.S. production and less robust global demand indicators.

Similarly, U.S. West Texas Intermediate (WTI) crude settled 98 cents higher at $63.11 a barrel on Friday, rising 1.6% to a new five-month closing high. WTI posted its fifth consecutive weekly gain, rising 4.9% over 5 days.

Both contracts hit new five-month highs

Oil prices are rallying in reaction to the U.S. employment report. According to John Kilduff, a partner at Again Capital LLC in New York:

“Signs of global economic slowdown had been a headwind for oil prices, but this morning’s report seemed to dispel at least some of those concerns.”

Meanwhile, Crude futures received a boost from news of a potential slowdown in crude production out of Venezuela, as U.S. sanctions and energy blackouts hit the OPEC nation’s oil industry.

Over-delivering Saudi Arabia is OPEC’s Bull

The combined production of all 14 OPEC members reportedly stood at 30.4 million bpd last month, down by 280,000 bpd compared to February and the lowest level of OPEC production since February 2015.

However, Saudi Arabia’s production cut has pushed down OPEC’s crude oil production by 570,000 bpd from February to 30.23 million bpd in March. According to the monthly report of S&P Global Platts survey, OPEC’s current production represents the lowest production in more than four years.

OPEC’s de facto leader and biggest producer, Saudi Arabia, reportedly cut its crude oil production in March to the lowest level since February 2017. The Country delivered on its promise to cut more than pledged in the pact and slashed output by another 280,000 bpd last month, with March production at 9.87 million bpd.

The U.S ‘NOPEC bill’ – Saudi Arabia threatens to ditch dollar oil trades

Saudi Arabia is reportedly threatening to sell its oil in currencies other than the dollar if Washington passes a bill exposing OPEC members to U.S. antitrust lawsuits.

The No Oil Producing and Exporting Cartels (NOPEC) which was first introduced in 2000, is a U.S. Congressional bill aimed at removing the state immunity shield. By extension, allowing OPEC and its national oil companies to be sued under U.S. antitrust law for anti-competitive attempts to limit the world’s supply of oil and the consequent impact on oil prices.

Report has rightly indicated that the chances of the NOPEC bill coming into force are slim and Saudi Arabia would be unlikely to follow through. Sources within the Saudi’s oil industry reportedly disclosed:

“let the Americans pass NOPEC and it would be the U.S. economy that would fall apart. The Saudis know they have the dollar as the nuclear option.”

Trump’s factor and U.S trade influence

The NOPEC bill has gained momentum since President Trump came into office. Prior to Trump’s election into office, he reportedly backed NOPEC in a book published in 2011. However, despite Trump’s continued tirade against OPEC, he has not yet voiced support for NOPEC as president.

On the contrary, while global trade has been advocating for moves to diversify trade from the dollar, economic superpowers are equalling plotting moves to dilute U.S influence over the world economy. Hence, it would resonate well with oil giant like Russia and consumers such as China and the European Union (EU) if Saudi’s move to ditch dollar sail through.

Saud Arabia’s influence and its Oil firm “Aramco” 

Saudi Arabia reportedly controls a 10th of global oil production, roughly on par with its main rivals – the United States and Russia. Its oil firm Saudi Aramco holds the crown of the world’s biggest oil exporter with sales of $356 billion.

Recently, it was reported that Saudi Arabian national petroleum and natural gas company, Saudi Aramco, recorded $111.1 billion in profit for FY 2018 as the world’s most profitable company.

Prices to rise as Venezuela’s Blackout lingers alongside Iraq Production Cut 

An earlier report has shown that OPEC’s oil production in March 2019 fell to its lowest level since February 2015, as Saudi Arabia cut more than it had pledged. Also, Venezuela continued to struggle amid U.S sanctions and a major blackout.

The power blackouts currently witnessed by Venezuela has crippled its oil industry and exports. The country reportedly saw its production drop to a 16-year-low, at 740,000 bpd.

Also, OPEC’s second-biggest producer Iraq, cut its production by 100,000 bpd, making its production reduced to 4.57 million bdb in March. This, however, was still slightly above Iraq’s  4.512 million bpd production cap under the deal.


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