Rallying from the immediate dip that happened after the historic production cut deal between the Organisation of Petroleum Exporting Companies (OPEC) and its Russia-led allies, oil prices inched up early Monday morning, signalling improving market confidence.
There was considerable pessimism among investors last Thursday regarding the possibility of the 10 million production cut deal that was brokered earlier that day impacting trade positively.
The sentiment indeed plunged the price of Brent, the benchmark for Nigeria’s oil grades, by 2.7% to $31.95 a barrel.
However, the deal was consummated on Sunday after four days of virtually conducted debates with OPEC and its allies eventually agreeing to a 9.7 million barrels per day cut, the single largest production cut in global history according to CNBC.
Responding to the development, Brent appreciated by 4.26% to $32.82 per barrel while America’s West Texas Intermediate went up to $23.87 per barrel, a 4.88% difference from its price at the previous session.
As of 08:12 West African Time Monday morning, Nigeria’s Bonny Light was trading at $26.40 per barrel up by 1.97%, Brass River at $27.33 down by 2.25%, and Qua Iboe at $27.33 down by 2.25%.
Put differently, all of Nigeria’s oil grades are selling below government’s new oil benchmark for the 2020 budget, which is $30 per barrel.
Finance Minister Zainab Ahmed said days ago that the possibility existed that government could review the new benchmark further if need be.
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