The price of Brent oil gained more than four per cent yesterday as the Organisation of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, resumed talks on February production quota.
Brent oil price hit over $53 a barrel as investors expect further cuts after world’s largest oil producers resumed a meeting to decide on production quota for February.
International benchmark Brent crude traded at $53.15 per barrel and compared to Monday, marked an increase of 4.03per cent after closing Monday at about $52 a barrel.
American benchmark West Texas Intermediate (WTI) was at $49.85 per barrel at the same time for a 04.68per cent increase after it ended the previous session at $47.62 a barrel.
Nigeria, the sixth largest oil producer in OPEC based its 2021 budget on oil benchmark of $40 per barrel up from $30 it was in 2020, when the country had to revise the 2020 Budget oil benchmark from $57 per barrel to $30. Exchange rate was also fixed at N379/$1 while production output was also revised from approximately 2.1 million barrels to 1.86 million per day.
Similarly, the ongoing friction between Iran and South Korea also contributed to the uptick in the Brent oil prices.
Tensions between Tehran and Seoul have escalated after Iran’s Islamic Revolutionary Guards Corps (IRGC) seized a South Korean-flagged oil tanker in the Persian Gulf on Monday for alleged violations of maritime environmental laws.
The group, which initially met on Monday, had postponed the meeting by one day due to friction between OPEC members over output rate cuts as some oil producing countries such as Russia and Kazakhstan are in favour of higher output levels while others including Iraq, Nigeria and the United Arab Emirates suggested holding output steady.
However, the positive expectations that the production level in January, which is 7.2 million barrels per day, will be kept as the same instead of adding up to 500,000 barrels exerted upward pressure on oil prices.
In a meeting in December, the group had agreed to add 500,000 barrels daily in January and, through monthly meetings, decide on the next month’s production quota that will not be more than 500,000 barrels daily.
