Crude oil prices pushed higher on Thursday after the OPEC+ alliance surprised traders with its decision to keep production unchanged, signaling the potential of an even tighter market next month.
At the time of writing this report, the U.S. West Texas Intermediate (WTI) crude rose 4.91 at $64.31, while Brent Crude, the international benchmark, was up by 5 per cent at $67.30.
In a statement issued at the end of its 14th OPEC and non-OPEC ministerial meeting, the committee agreed to keep oil output unchanged in April while Saudi Arabia will also maintain its 1 million barrel-a-day voluntary production cut next month.
Saudi Arabia, the world’s biggest oil exporter, had at a meeting in January agreed to cut oil production for the months of February and March by an extra voluntary amount of one million barrels per day.
The meeting also commended Nigeria for achieving full conformity in January 2021 and compensating its entire overproduced volumes.
It also urged all participants to achieve full conformity and make up for previous compensation shortfalls, to reach the “objective of market rebalancing” and avoid undue delay in the process.
The rally in oil prices comes as a good news to Nigeria, Africa’s largest economy, that is relying on earnings from oil to finance its N13.588 trillion 2021 budget.
The budget has a benchmark oil price of $40 per barrel; daily oil production estimate of 1.86 million barrels (inclusive of condensates of 300,000 to 400,000 barrels per day); exchange rate of N379 per US Dollar; GDP growth projected at three per cent; and inflation closing at 11.95 per cent.
Oil price has been on a tear since late last year as coronavirus vaccines and supply curbs from OPEC and its allies spur hopes that global stockpiles will continue to slide.