Oil prices touched their highest level since March on Friday, a day after major producers agreed to ease their oil output cuts next year more gradually than previously planned — giving a fragile market more time to absorb the extra supply.
As at Friday evening, brent crude, the international benchmark, spiked 1.13 percent to almost $50 per barrel, peaking at $49.25 a barrel — the highest since March 5, 2020, when it traded at N49.99, while WTI crude was up by 1.03 percent at $46.06.
This is good news for Nigeria as crude oil accounts for half of the government’s income and about 90 percent of Nigeria’s foreign exchange earnings.
The nation’s economy has continued to battle foreign exchange scarcity following plummeting crude oil prices in the international market caused by the COVID-19 pandemic.
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The Organization of Petroleum Exporting Countries plus (OPEC+), a group of non-OPEC countries which export crude oil, yesterday agreed to ease oil-output cuts next year after almost a week of fraught negotiations that exposed a new rift at the heart of the cartel.
The group agreed to add 500,000 barrels a day of production to the market in January, and ministers will then hold monthly consultations to decide on the next steps.
That’s a much shorter time frame than OPEC+ usually operates under, and before this week the expectation had been that the group would hold off putting more oil onto the fragile market for another three months.
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But the compromise deal avoided a breakdown of OPEC+ unity, which had become a growing risk after days of tense talks exposed a new split between core cartel members, the United Arab Emirates, and Saudi Arabia.
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