The price of crude oil, yesterday, dropped to $50.00, showing $10 below Nigeria’s $60 per barrel 2019 budget benchmark in the volatile global market. The price of Brent, West Texas Intermediate, WTI, and Organisation of Petroleum Exporting Countries, OPEC, basket of 15 crudes stood at $50.00, $45.00 and $53.92 per barrel respectively.
Traders attributed the development to over-supply, coming from some non-OPEC oil producers that are not involved in the supply cut deal. Meanwhile, OPEC said it was committed to achieving stability in the market, in the best interest of producers and consumers. Secretary-General of the organisation, Dr. Mohammad Barkindo, disclosed in his address presented in Angola: “OPEC knew it had to act in the face of this potential calamity.
Throughout 2016, extensive consultations were undertaken with our non-OPEC partners, aimed at building consensus about the strategic urgency of rebalancing of the global oil market in a collective manner. “Twenty-four (now 25) oil producing nations agreed at the first OPEC and non-OPEC Ministerial Meeting held on the 10th of December 2016 in Vienna, on a concerted effort to accelerate the stabilisation of the global oil market through voluntary adjustments in total production of around 1.8 million barrels per day.
“What would become clearer in time is that one of the greatest inherent strengths of the ‘Declaration of Cooperation’ was its flexibility, grounded on the core principles of equity, fairness and transparency. “Over the last two years, the partners have been able to modify course depending on conditions in the market. When the market appeared skewed to oversupply, we have reacted accordingly, and equally, when consumers expressed concerns regarding demand outpacing supply, the partners in the DoC have taken appropriate action.
“This was best exemplified by the decisions of the 174th OPEC Conference, 22 June 2018, and the 4th OPEC and Non-OPEC Ministerial Meeting, 23 June, where participating countries decided to strive to adhere to the overall conformity level, voluntarily adjusted to 100%. Therefore the DoC should be viewed as an adaptable toolkit to address imbalances in the market.” “The most recent iteration of this ongoing undertaking occurred on 6th and 7th December at the 175th Meeting of the OPEC conference and the 5th Ministerial Meeting of OPEC and non-OPEC. “Following extensive analysis and deliberations on the immediate oil market prospects and, in view of a growing imbalance between global oil supply and demand in 2019, the partners decided to adjust the overall production by a combined 1.2 mb/d, effective as of January 2019 for an initial period of six months.”
It added: “If I was to use a single word to describe the impact of this cooperation on the oil market, it would be: transformative. A long-absent element of stability has been reintroduced. There have been significant changes in industry-wide and public perceptions of OPEC. The Organization has ably demonstrated its credentials as a body committed to international cooperation, working with other producers, honouring its commitments and promoting mutual respect among all nations.”