The price of Brent, the global benchmark for crude, gained $1.62 by rising to $93.4/barrel at 6.23pm Nigerian time on Wednesday, as oil producers agreed on a major production cut.
Members of the Organisation of Petroleum Exporting Countries and their Russia-led allies agreed on a major cut in oil production on Wednesday, a move to prop up prices that could bolster sanction-hit Moscow’s coffers and irk Washington.
Nigeria is a strong member of OPEC as the country pumps over 1.4 million barrels of crude daily, though this figure has crashed due to the activities of vandals and oil thieves in the Niger Delta.
AFP reported that the 13-nation OPEC cartel and its 10 Russian-led allies agreed to reduce two million barrels per day from November at a meeting in Vienna, according to Iran’s OPEC Governor, Amir Zamaninia. It is the biggest cut since the height of the COVID-19 pandemic in 2020.
Such a move could turbocharge crude prices, further aggravating inflation which has reached decades-high levels in many countries and is contributing to a global economic slowdown.
It could also give Russia a boost ahead of a European Union ban on most of its crude exports later this year and a bid by the group of seven wealthy democracies to cap the country’s oil prices.
US President Joe Biden personally appealed to Saudi leaders in July to boost production in order to tame prices which soared following Russia’s invasion of Ukraine earlier this year.
But crude prices have fallen in recent months on concerns over dwindling demand and fears over a possible global recession.
“With consumers only just breathing a sigh of relief after being forced to pay record prices at the pump, today’s cut is not going to go down well,” said Craig Erlam, an analyst at trading platform OANDA, ahead of the meeting, AFP reported.
When asked how the United States would react to a cut, the energy minister of the United Arab Emirates, Suhail al-Mazrouei, insisted that OPEC was merely a “technical organisation”.
Alexander Novak, the Russian Deputy Prime Minister in charge of energy, who is under US sanctions, remained mum as he arrived for the group’s first in-person meeting at its Vienna headquarters since March 2020.
