Oil prices dip as OPEC meets in Russia

Brent crude dropped by $1.35 from Friday’s closing price of $49.54 ahead of OPEC’s meeting with delegates from Nigeria and Libya to discuss the possibility of future oil production cuts.

In December 2016, members and non-members of the Organization of Petroleum Exporting Countries agreed to put a cap on oil production to reduce the oil supply glut in the global market.

Although prices started recovering in the early hours of Monday, West Texas Intermediate traded at $45.85 a barrel as of 11am, $1.24 short of Friday’s closing price of $47.09.

Brent crude traded at $48.19 per barrel of oil.

Issam Almarzooq, Kuwait’s oil minister, had said that the organisation might ask both countries to cap production if they can stabilise production at current levels.

“We invited them to discuss the situation of their production. If they are able to stabilise their production at current levels, we will ask them to cap as soon as possible. We don’t need to wait until the November meeting to do that,” he he said.

At the May 2017 OPEC meeting in Vienna, Ibe Kachikwu, minister of state for petroleum resources, had said Nigeria had no problem with joining the production cuts as long as production could stabilise at 1.8 million barrels per day.

“A rebound in Libyan and Nigerian production added pressure to an already amply supplied Atlantic Basin due to a massive increase in US shale oil production, while demand from Asia was weaker on account of upcoming refinery maintenance and unfavourable arbitrage economics,” OPEC had said in its July 2017 monthly report.

In its monthly oil market report for July 2017, OPEC said Nigeria’s oil output hit an average of 1.733 million barrels per day, according to secondary sources.

The last time Nigeria crossed the average 1.733 was late 2015, before the return of oil facility vandalisation in the Niger Delta.