Nigeria has cause to be confident this year as Brent oil prices rose on Wednesday, the highest since February last year after Saudi Arabia said it will make bigger cuts in output than expected during a meeting with allied producers.
Analysts say, the new price ensures that the country is on the right path with its crude oil price benchmark for this year year’s budget.
Brent crude rose as much as 0.6 per cent to $53.94 a barrel, the highest since February 26, 2020. It was at $53.79 a barrel and gained 4.9 per cent on Tuesday.
U.S. West Texas Intermediate (WTI) futures gained 13 cents, or 0.26 per cent, to $50.06 a barrel. The contract on Tuesday closed up 4.6 per cent at $49.93, its highest since Feb. 24, 2020.
Saudi Arabia, the world’s biggest oil exporter, agreed on Tuesday to make additional, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March, after a meeting with the Organization of Petroleum Exporting Countries, OPEC, and other major producers that form the group known as OPEC+.
The reductions agreed by Saudi Arabia were included in a deal to persuade other producers in the OPEC+ group to hold output steady.
With coronavirus infections spreading rapidly in many parts of the world producers are trying to support prices as demand takes a hit from new lockdowns being put in place.
“The decision came as a huge surprise as the organisation struggled yesterday to agree to a deal,” Capital Economics said in a note.
It “adds weight to our view that the oil market will be in a deficit which will help lift the price of Brent to $60 per barrel by end-year,” it said.
OPEC member Iran’s seizure of a South Korean tanker in the Gulf also supported prices on Wednesday.
Tehran denied it was holding the ship and its crew as hostages, a day after it seized the tanker while pushing for Seoul to release $7 billion of funds frozen under U.S. sanctions.
