Their hope for the economy of Nigeria and another oil-dependent economy to rebound following the price of crude oil that has been hovering around $50 since the beginning of this year 2021.
The price of the commodity improved after OPEC and its allies reached an agreement to cut production levels.
Oil prices recovered as Russia agreed to extend the current level of production by the Organization of the Petroleum Exporting Countries OPEC and its allies, known as OPEC+, into February.
Although the price of Brent crude suffered a decline on Monday, slipping from a record high of $53.30 to $51.24, watchers remained optimistic as it still hovers around the $50 band.
The Nigerian 2021 Federal budget approved a $40 oil benchmark and also an FX target of N379/$ for the budget. This is seen as a good omen following the current oil price.
President Muhammad Buhari has signed the 2021 Appropriation Bill of N13.588 trillion into law today, 31st December 2020. The budget estimate increased by N505.61 billion from the initial N13.082 billion presented by the President to the National Assembly earlier in October. Recurrent Expenditure – N5.64 trillion; Capital Expenditure – N4.125 trillion; Debt Servicing – N3.324 trillion and Statutory transfer – N496.528 billion
During a session on Monday, the group of major oil producers failed to reach an agreement on production levels for February, leading to a fall in oil prices.
Before the beginning of another round of the virtual discussions on Tuesday, Oilprice.com reported that Russia – one of the countries that demanded production increases in February during Monday’s talks – was in favor of maintaining the current output levels. OPEC+ had reached an agreement in December to increase output by 500,000 barrels per day (bpd) this month and make further adjustments in the coming months.
Ahead of the OPEC+ virtual conference on Monday, oil prices rallied with Brent Crude, the global benchmark, reaching $53 per barrel (pbl) – its highest since March 2020. West Texas Intermediate (WTI), the US benchmark, also rallied to its highest level since February of last year.
Oil prices tumbled on Monday as the group of oil producers deadlocked. Most OPEC+ members expressed their opposition to increasing oil output from February, citing the new waves of the coronavirus disease and renewed demand uncertainty. Meanwhile, Russia and Kazakhstan demanded another increase of 500,000 bpd from the next month.
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