A week after it had risen to $34.11, the price of Bonny Light, Nigeria’s premium oil grade, has dropped slightly to $33.25 in the international market.
Despite the slight drop, the price still indicated an excess oil revenue of $8.25 per barrel as the nation’s 2020 budget was based on $25 per barrel and 1.9 million daily oil output.
However, some stakeholders, including the Organisation of Petroleum Exporting Countries, OPEC, expect the market to be relatively stable in the coming weeks.
The investigation by Vanguard indicated that the market is driven by the gradual relaxation of lockdown around the world, which encourages increased movement of goods and persons from one place another, demanding the use of petroleum products.
It is also fueled by the gradual restreaming of some economies, especially China, culminating in the purchase of commercial oil, which constitutes a major factor fuelling the market.
For instance, on May 20, 2020, at least three tankers, loaded with crude, were seen heading toward China. Furthermore, the market is said to be propelled by the beginning of commercial refining in many nations, including the United States and China, which have called for improved utilisation of oil, leading to the disappearance of ‘unsold stocks’ in many markets.
However, in its latest report, the International Energy Agency, IEA, stated: “Mobility remains limited for many citizens, but businesses are starting to reopen gradually and people are returning to work, which will provide a boost to oil demand, albeit a modest one at first. T
aking into account these developments as well as new mobility data from advanced economies that were stronger than in our previous forecast, we have raised our 2Q20 demand estimate.
“We are seeing massive cuts in output from countries outside the OPEC+ agreement and faster than expected. In June, that drop could reach four million barrels per day, mb/d, with perhaps more to come.”
In a statement obtained by Vanguard, OPEC had attributed it partly to increased engagements with many stakeholders, including China, which recently held a meeting with the organisation.
According to OPEC, “The meeting reflected on the impact of the COVID-19 pandemic on the global economy and oil market, as well as China’s domestic oil market, the rebalancing process of oil supply and demand, and China’s solutions for and optimization of the oil and gas trade system.
The meeting also reached a consensus on the importance of energy security and maintaining stability in the energy markets, strengthening collaboration between OPEC and China, as well as supporting and promoting the unique importance of multilateralism and globalization.
“HE Barkindo and HE Zhang last met in October 2019 at the 3rd High-Level Meeting of the OPEC-China Energy Dialogue, held at the OPEC headquarters in Vienna.
The meeting laid a solid foundation for future cooperation and participants were enthusiastic about the deepening dialogue between OPEC and China. “…the pandemic has provided the opportunity to further strengthen this relationship, and proven that the forces of globalization are irreversible,” Secretary-General Barkindo stated in today’s Webinar meeting, adding the “rich lessons we are currently learning from the pandemic make it abundantly clear that the triumph of multilateralism and international cooperation cannot be disputed.
“HE Barkindo referred to recent decisions taken by participants of the Declaration of Cooperation at the 9th and 10th (Extraordinary) OPEC and Non-OPEC Ministerial meetings held on 9-10 and 12 April 2020, respectively, to adjust overall crude oil production by 9.7 mb/d for May and June 2020; from 1 July 2020 to 31 December 2020 by 7.7 mb/d; and from 1 January 2021 to 30 April 2022 by 5.8 mb/d.”