OPEC oil now $27…$18 may be sooner than later

The Organisation of Petroleum Exporting Countries (OPEC) basket price for oil may be closer to the predicted $18 than thought, with the oil currently trading at $27.85 per barrel.

According to OPEC secretariat calculations released on Friday, “the price of OPEC basket of thirteen crudes stood at 27.85 dollars a barrel on Thursday, compared with $29.71 the previous day”.

Brent crude was 45 cents lower at $33.78 a barrel after sliding during European trading to a low of $32.16, a level last seen in April 2004.

US West Texas Intermediate (WTI) was initially down by 3.9% to $32.40, its lowest since the 2008 global economic crisis WTI but eventually settled down at $33.27 a barrel.

The global oversupply has continued to pull oil prices to new lows, leading to approximately 70 percent reduction in value than when the downturn began in June 2014.

John Kilduff, founding partner at Again Capital, told CNBC on Monday that oil prices could go as low as $18 per barrel, following the Saudi-Iran tensions which fuelled soaring prices on Monday.

“I think you’re going to get as low as $18 and maybe get as high as $48. … It’s going to get really ugly,” he told CNBC.

“The Iranians doubled down again, if that’s even possible, by saying that they could put 500,000 more barrels on the market within weeks after the sanctions get lifted.”

With current rate of decline, oil prices may sink to $18 earlier than expected.

Global oversupply is currently within 500,000 to 2 million barrels per day, and could reach 3 million if Iran lives up to its word to add up to one million bpd as soon as possible.

In all of these, Nigeria’s budgetary benchmark for 2016 fiscal year, still stands at overly optimistic $38 per barrel.

The new OPEC reference basket of crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).