COVID-19: Oil rises above $34, OPEC+ to meet Monday

ECONOMY

Posted  163 Views updated 3 months ago

The international oil benchmark, Brent crude, extended its gains on Friday, climbing to as high as $34.91 a barrel on rising hopes of a new global deal to cut crude supply, NEWS FLAKES NG reports. 

 

Brent soared as much as 47 per cent on Thursday for its highest intraday percentage gain on record.

 

The upturn in crude oil prices came after the United States President, Donald Trump, said he expected that Saudi Arabia and Russia would agree to new oil production cuts.

 

NEWS FLAKES NG gathers that Brent had fallen to an 18-year low of $22 per barrel on Monday as a coronavirus-driven lockdown severely reduced oil demand amid an escalating price war between Saudi Arabia and Russia.

 

The Federal Government, which was looking to generate 32.34 per cent (N2.64tn) of expected total revenue from oil, was forced to propose the reduction of the benchmark to $30 from $57 on the back of the sharp drop in oil prices.

 

The Organisation of Petroleum Exporting Countries and its allies, led by Russia, are working on a deal for an unprecedented production cut equivalent to about 10 per cent of global supply, an OPEC source said, according to Reuters.

 

Oil prices slumped 65 per cent in the first quarter of this year on a demand slump caused by the global coronavirus outbreak and moves by Russia and Saudi Arabia to flood the market after their failure last month to extend much smaller OPEC+ supply cuts.

 

A meeting of OPEC and its allies, a grouping known as OPEC+, has been scheduled for Monday, the Azerbaijan energy ministry said, but details on the distribution of production cuts were thin on the ground.

 

Trump said on Thursday that he had spoken with both Russian President, Vladimir Putin and Saudi Crown, Prince Mohammed bin Salman and they had agreed to reduce supplies by 10 million to 15 million barrels per day out of total global supply of about 100 million bpd.

 

Trump said he did not make any concessions, such as agreeing to a US production cut – a move forbidden by US antitrust legislation.

 

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