Brent Crude oil prices dropped to as low as $82 per barrel for the first time since January 2022, after reports suggest that Opec could be considering an increase in output.
An increase in crude oil output is often considered a signal that prices could drop in the near terms
A Wallstreet journal report had indicated that there were ongoing talks between Saudi Arabia and other members of the Opec to consider a ramp-up in output by about 500,000 barrels per day when it meets on December 4th.
Denials: However, late Monday, Saudi Energy Minister, Prince Abdulaziz bin Salman, categorically denied reports that Saudi Arabia is discussing with other OPEC producers an output increase of 500,000 barrels per day.
This is according to Amena Bakr, chief OPEC correspondent through her official Twitter account.
“If there is a need to take further measures by reducing production to balance supply and demand, we always remain ready to intervene,” Amena wrote, quoting Prince Salman.
On October 5, 2022, when the Brent crude price was at $93.25, OPEC agreed to cut crude oil production by 2 million barrels per day from the month of November 2022.
The decision was taken due to the uncertainty surrounding the global economy and oil market outlooks and the need to enhance the long-term guidance for the oil market.
The Nigerian context: Nigeria is grappling with meeting its Opec quota due to massive crude oil thefts and several other production challenges.
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The result is lower government revenues which have resulted in widening budget deficits and reliance on the central bank to fund the government.
Thus, falling crude oil prices could worsen an already bad situation for Nigeria
Apart from the risk of widening fiscal deficits, Nigeria’s central bank relies heavily on crude oil prices to shore up its external res
For example, data from the Central Bank of Nigeria shows that the country’s external reserves fell to fell to $37.17 billion as of November 15, 2022, a one-year low
Weighing in: As an oil and gas analyst, Dan. D Kunle told Nairametrics on Monday, Nigeria recording over a million barrels of crude oil production in October 2022, for the first time since July 2022, is not worth celebrating.
According to Kunle, Nigeria can do so much better in crude oil production, “in fact, we should be producing up to 3 million barrels per day in Nigeria,” Kunle noted.
Back-Up: Oil prices rebounded after the drop to about $87 per barrel as the market reacted to the denial by Saudi.
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This was also helped by comments from Saudi Energy Minister Prince Abdulaziz bin Salman that the current 2 million barrels per day will remain.
“The current cut of 2 million barrels per day by Opec+ continues until the end of 2023 and if there is a need to take further measures by reducing production to balance supply and demand, we always remain ready to intervene,”