Over recent years, global crude oil prices have stood over $100 a barrel, allowing Nigeria to budget for largescale infrastructure spending. However, over the last six months, prices have gradually collapsed and now threaten to fall below production costs due to a combination of reduced demand and excess supply.
Yesterday, Nigeria's minister of state for petroleum resources, Emmanuel Ibe Kachikwu, said a couple of Opec members are requesting an emergency meeting, saying current market conditions justify the need to hold such a gathering. Benchmark Brent Crude, which is identical to Nigeria's Bonny Light Crude, fell to their lowest level since April 2004 and have shed almost three-quarters of their value since mid-2014.
Speaking at an energy conference in Abu Dhabi, Mr Kachikwu said: “A couple of countries have requested holding an emergency meeting. We did say that if the price hits $35 per barrel, we will begin to look at an extraordinary meeting and prices have now hit levels that necessitate a meeting."
He added that any meeting that would take place would be to review Opec’s position to see if there was any need to change its strategy, pointing out that the meeting could take place in February or March. Mr Kachikwu, who was Opec president until the end of December, said that member states differ on the issue of intervention.
Saudi-led Gulf exporters within Opec have so far refused to cut production to curb sliding prices, seeking to protect their market share despite a heavy blow to their revenues. However, Latin American and African producers are likely to demand to demand a cut in output to control the current market glut.
Mr Kachikwu said: “One group feels there is a need to intervene and the other group feels even if we did, we are only 30% to 35% of the producers as 65% of supply comes from non-Opec countries. Unless you have this 65% of producers coming back to the table, you really won’t make any dramatic difference."
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