Oil Price Jumps to A Record of  $57

By Ikenga Chronicles December 13, 2016

Following the decision of  the 11 non-members of the Organisation of Petroleum Exporting Countries, including Russia to cut production by 558,000 barrels per say, global oil benchmark and Brent crude sold at $57. This development has not been experienced since 2015 as Brent soared to $57.89 before falling back to $56.13 as of 7.35 pm on Monday.

The decision by the non-OPEC members on Saturday followed the November 30 deal by OPEC to cut output by 1.2 million bpd for six months from January 1, 2017 to curb the supply glut that had dogged markets for two years and boost prices.

Economy of member countries are however, expected to boom as the  difference between the international benchmark and Nigeria’s budget benchmark of $38 for this year has now risen a little above $18 per barrel. The Federal Government has however  proposed a crude oil benchmark price of $42.5 per barrel for the 2017 budget.

The other non-OPEC members responsible for the development include Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and Republic of South Sudan.

This is the first achievement by OPEC with its rivals since 2001 to jointly reduce output in order to try to tackle global oversupply.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had said oil prices at $60 per barrel would be “ideal” for OPEC as higher levels risk sparking a recovery in competing supplies from the United States.

The “urgency” felt by OPEC and its partners to end the oil rout would ensure they adhered to their December 10 agreement to cut supplies, Kachikwu said in a Bloomberg Television interview on Monday.

He said the accord should push prices a bit higher, yet not enough to trigger a comeback in the US shale. “Sixty, I think would be ideal,” he said.

“Once you begin to trend past the mid-$60s, you’re going to have a surfeit of shale producers jump back into the market. Technology is improving with shale every day, and so the cost of production is continuing to drop.”

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