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Oil price falls despite OPEC agreement to cut supply by 10m bpd

Oil price falls despite OPEC agreement to cut oil by 10m bpd

Oil prices plunged Thursday by as much as 12% as the deal to cut global production by 10 million barrels per day (bpd) failed to wow investors.

Earlier, Russia and OPEC+ had reached a resolution after a virtual conference lasting about 9 hours to reduce output, a decision which fell short of the 35 million bpd drop in demand anticipated after the coronavirus outbreak.

Brent, against which Nigeria’s crude grades are benchmarked, dropped by 2.7% to $31.95 a barrel while US’s West Texas Intermediate fell to 6% to $23.39

According to Bloomberg, OPEC and its allies are envisaged to pursue a production cut of 5 million bpd for G20 countries, which has the US, itself an oil producer, among its members.

Read also: Nigerian govt plans to shut down refineries for upgrade

Oil has been falling steeply since the coronavirus broke out with global demand plunging amidst sweeping flight cancellations and consumers needing to stay at home in order to contain spread.

Analysts and pundits are projecting even worse days for oil with the US Energy Information Administration this week reviewing its outlook for 2020 downward.

It said it would, for the first time since 2019, be a net importer of both crude and petroleum in order to aid talks.

Experts are pessimistic that output cuts will not be sufficient to increase oil prices considerably.

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