Nigeria and her allies in OPEC are meeting today to decide on the best way to stem the price of crude oil that has consistently being going up in last few weeks. The cartel may be joined by non OPEC countries that have teamed up with OPEC to moderate the volume of crude oil pumped into the international market since the outbreak of COVID19 pandemic.
They are most likely to decide on additional quantity of crude oil that they are ready to push to the market that may possibly moderate the price which got $80 last week before coming down to $79 per barrel.
The reason why the price of oil is high is because of bigger increase in gas prices, which have spiked 300% and have come to trade close to an equivalent of $200 per barrel due to supply shortages and low production of other fuels.
The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, agreed in July to boost output by 400,000 barrels per day every month until at least April 2022 to phase out 5.8 million bpd of existing cuts
The effect of the increase would not be felt until November because the organization had decided the October volume in its last meeting.
The nearest month any increase could occur is November since OPEC+’s last meeting decided the October volumes.
Rising oil, gas, coal and power prices are feeding inflationary pressures worldwide and slowing the recovery.
The most significant rise in oil production among OPEC members in September came from Nigeria, which boosted its production by 170,000 bpd, according to the Reuters survey. “This shouldn’t be surprising, considering that Nigerian oil supply slumped in August after Shell declared in mid-August force majeure on Forcados exports.”
“OPEC’s production in September is the highest since April 2020. Back then, the cartel and Russia were at odds over how the OPEC+ pact should proceed with supply management during the worst of the pandemic globally and were pumping at will for around a month before reaching a deal to stop the oil price collapse.”
The rise in OPEC’s oil production in September is mostly the result of the decision of the OPEC+ group from July 18 that it would start returning 400,000 bpd to the market every month beginning in August until it unwinds all the 5.8 million bpd cuts. The group agreed to extend the existing deal from April 2020 through the end of December 2022.
According to a survey published by Reuters survey on Thursday, OPEC’s all 13 members have been pumped on the average 27.31 million bpd in the month of September, an increase of 420,000 bpd compared to August
Russian oil and gas condensate output rose to 10.72 million bpd in September, the highest level since the 11.34 million bpd pumped in April 2020, data showed on Saturday.
On Friday, grade of crude oil, Brent, rose above $79 a barrel, supported by tight supplies due to supply curbs ahead of the meeting of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) today.
The global crude benchmark appreciated by 1.07 per cent or 85 cents yesterday to sell at $79.15 per barrel, while the US grade, West Texas Intermediate (WTI), moved up by 0.93 per cent or 70 cents to trade at $75.73 per barrel.