From Uche Usim, Abuja
Cheery news came the way of Nigeria and other petroleum-producing countries Wednesday as Brent crude oil prices rose to their highest since February 2020.
The rise comes after Saudi Arabia made assurances of making bigger cuts in output than expected during a meeting with allied producers.
Brent crude, the grade of Nigeria’s crude reserves, rose as much as 0.6 per cent to $53.94 a barrel, the highest since February 26, 2020. It was at $53.79 a barrel and gained 4.9 per cent on Tuesday.
US West Texas Intermediate (WTI) futures gained 13 cents, or 0.26 per cent, to $50.06 a barrel. The contract on Tuesday closed up 4.6 per cent at $49.93, its highest since Feb. 24, 2020.
Saudi Arabia, the world’s biggest oil exporter, agreed on Tuesday to make additional, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March, after a meeting with the Organization of Petroleum Exporting Countries (OPEC) and other major producers that form the group known as OPEC+.
The reductions agreed by Saudi Arabia were included in a deal to persuade other producers in the OPEC+ group to hold output steady.
With ravaging COVID-19 infections spreading rapidly in many parts of the world, producers are fighting to support prices as demand takes a hit from new lockdowns being put in place.
‘The decision came as a huge surprise as the organisation struggled yesterday to agree to a deal,’ Capital Economics said in a note.
It ‘adds weight to our view that the oil market will be in a deficit which will help lift the price of Brent to $60 per barrel by end-year,’ it said.
OPEC member Iran’s seizure of a South Korean tanker in the Gulf also supported prices on Wednesday.