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Oil prices extended gains on Friday buoyed by the suggestion by the Russian Deputy Prime Minister, Alexander Novak, that the Organisation of Petroleum Exporting Countries (OPEC) and its allies could reverse its output increase after April.
However, prices were still on track for a more than 3 per cent weekly decline on concerns over US tariff policies.
Brent crude, Nigeria’s price benchmark, rose 99 cents, or 1.4 per cent, to $70.45 a barrel in the afternoon yesterday, as US West Texas Intermediate (WTI) futures were up 93 cents, also 1.4 per cent, at $67.29.
The marginal rise in the price of crude oil portends mixed signals for Nigeria. While rising prices could mean higher revenues for the country, it also means that Nigerians could pay more at the pumps for petrol, a major need for many families and businesses in the country.
However, falling international oil prices imply that Nigerians will buy petrol and other products at lower prices, but overall revenue to the federal and state governments will likely reduce.
But on Friday, Brent jumped to as much as $70.76 during the session and WTI hit $67.68 after Russia’s Novak told reporters that the OPEC+ producer group will go ahead with its April increase but may then consider other steps.
“When examining the global oil balance OPEC+ must have deemed in its assessment that it was sufficiently constructive that the oil market could absorb extra barrels without undue negative influence on the price … so far it seems the price action has proved them wrong,” Novak said.
Brent was down 3.8 per cent over the week, set for its biggest weekly decline since the week of November 11. WTI was also set to finish 3.6 per cent down for its biggest weekly drop since the week of January 21.
“The caution expressed by Novak is simply another way of reiterating OPEC+’s conditionality clause relative to ‘market conditions’. These conditions will dictate whether or not they keep to the plan of incrementally winding down their voluntary cuts,” a Reuters report said.
Brent prices fell to their lowest since December 2021 on Wednesday after US crude inventories rose and OPEC+ announced its decision to increase output quotas.
The market may have overreacted to OPEC+ members increasing output, but Novak clarified that additions will only happen if they can be absorbed to maintain market balance.
The group had said it intended to proceed with a planned April output increase, adding 138,000 barrels per day to the market.
Also, comments from Treasury Secretary Scott Bessent indicated that the US aim is to reduce Iranian crude exports to a trickle.
US President Donald Trump’s administration is considering a plan to inspect Iranian oil tankers at sea, Reuters reported on Thursday, citing sources familiar with the matter, continuing efforts to drive down Iranian oil exports to zero.
Trump had suspended the 25 per cent tariffs he had imposed on most goods from Canada and Mexico until April 2, though steel and aluminium tariffs would still take effect on March 12.
With a likely uncertainty in pricing, the option left for Nigeria is to raise crude production to meet its 2.06 million barrels per day budget benchmark to fund its almost N55 trillion budget for 2025.
Emmanuel Addeh
The post Oil Prices Rise as Russia Hints at Possible OPEC+ Policy Reversal appeared first on Arise News.
