Relief for Nigeria, others as oil prices hit $30

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Relief is coming for Nigeria after global oil prices hit $30 on hopes of an agreement between Russia and Saudi Arabia to cut production.

Nigeria’s economy was heading for a fresh recession after oil prices dipped to the $20s.

This forced President Muhammadu Buhari to cut the 2020 budget drastically and suspend many projects,including the controversial plan to renovate the National Assembly complex for N37 billion.

Guardian of London reports that global oil prices rebounded to more than $30 a barrel for the first time in almost a month on Thursday after Saudi Arabia and Russia signalled a possible truce in a price war that has triggered the fastest oil market collapse in decades.

The price of Brent crude leapt by 30% after the US president, Donald Trump, fanned hopes of a new deal between Riyadh and Moscow to help stabilise the oil market.

Oil prices fell to 18-year lows of $23 a barrel earlier this week as Russia and Saudi Arabia prepared to wrestle for a greater share of the market by increasing production despite falling energy demand because of the Covid-19 pandemic.

Trump tweeted on Thursday that he had spoken to Saudi crown prince Mohammed bin Salman and expected Riyadh and Moscow to cut output by as much as 15m barrels a day.

The president initially said the oil production cut should be about 10m barrels a day, but raised the figure to 15m in a subsequent tweet. “If it happens,” he wrote on Twitter, it “will be GREAT for the oil & gas industry!”

Hopes of renewed cooperation in the oil market were later dampened by a spokesman for the Russian president, Vladimir Putin, who reportedly told journalists that “no one has started talking about any specific or even abstract deals”.

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Riyadh and Moscow roiled global oil markets last month by vowing to raise production to record levels after the failure of talks to cut it in response to the collapse in energy demand caused by the coronavirus.

Saudi Arabia said it would increase production to 13m barrels a day after Russia refused to comply with the plan for cuts, and Moscow retaliated by threatening to increase its own production.

Oil industry analysts said Trump’s plan would not go far enough to offset the devastating effect of the coronavirus pandemic on energy markets.

The economic slowdown across major global economies currently in lockdown could wipe 20m barrels a day from the world’s demand for oil, according to analysts at Redburn Energy. “Whilst no form of output agreement could hope to offset the 20m barrels of demand destruction currently being wrought by Covid-19, it could set up a more rapid recovery on the other side,” they said.

Trump is expected to meet the chief executives of some of the largest US oil companies at the White House on Friday to discuss how the industry can weather the crisis.

The Exxon Mobil boss, Darren Woods, the Chevron chief executive, Mike Wirth, and the executive chairman of Continental Resources, Harold Hamm, are among those expected to attend.