Following the intense disagreement between Saudi Arabia and Iran, the two major oil producing countries, the member countries of the Organisation of Petroleum Exporting Countries (OPEC) over the weekend suffered 4 percent loss in crude oil price.
The refusal of the countries to accept each other’s level of oil production cut output led to Brent crude (where Nigeria oil is classified) settling down to $1.76, or 4 .2 percent, at $45.89 a barrel for the week ended Friday 23 September.
The development was unfavorable for most countries, including Nigeria, that the outcome of a pre-meeting before September 26-28 in Algeria would see the two Arab countries have a consensus on production cut.
Data from the United States indicated Saudi Arabia and Iran have about 48 percent of total OPEC output, adding that there have been quite a number of new oil rigs in the US since the quarter of 2014, leading to the price crash that began two years ago.
But an observer said a sign of price stability early last week, when Saudi Arabia offered to reduce production, with the proviso that Iran should also cap its own output before 2016 ends, was shattered.
In order not to be taken unawares, some member-countries, including Venezuela and Iraq have indicated interest to wade into the crisis before the general meeting, said the observer.
“If the Algeria, OPEC’s second attempt for an agreement on production curbs, after a failed effort in May, the market will suffer irreparably in the next few months to come, which no member-country will be better off,” according to OPEC President Dr. Mohammed Bin Saleh Al-Sada.
Concern may also have to shift to non-OPEC member, Russia, as the world’s largest oil exporter whose outputs hit a record time high in the last two months,
Meanwhile, according to a Venezuelan official at the weekend, the misunderstanding should not be coming from OPEC at this time, given the readiness of U.S. and other countries to supply the world’s needs of the commodity.
Also, the U.S. West Texas Intermediate crude fell to $1.84, or 4 percent, to settle at $44.48.
