Adedapo Adesanya
By Adedapo Adesanya
Brent Crude fell below $50 per barrel during trading on Friday as oil recorded its worst loss since 2016, caused by the coronavirus that is affecting the global economy.
The virus, which has affected oil prices for majority of February, has now spread to over 50 countries, including Nigeria, crippling demand for crude oil due to restriction on movements in some countries as part of efforts to curb its spread. It has also affected the global stock market, resulting in the loss of over $6 trillion.
As at yesterday night, the Brent crude fell $2.06 or 3.98 percent to $49.67 per barrel, leading to over 14 percent lost this week by the international oil benchmark.
On its part, the US West Texas Intermediate (WTI) crude further dropped to the $45 mark yesterday after losing 3.89 percent equivalent to $1.83 to settle at $45.31 per barrel. The grade of oil has lost over 16 percent this week, the largest weekly decline since the period ended December 19, 2008.
Latest reports show that coronavirus has killed more than 2,800 people and infected more than 83,000 worldwide
Oil prices got a renewed hope towards deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies, including Russia, a grouping known as OPEC+.
Business Post earlier reported that Saudi Arabia was pushing OPEC to increase its production cut to one million barrels per day. Just a few weeks ago, OPEC’s Joint Technical Committee recommended additional cuts that has not been agreed to since.
The Kingdom’s proposal would entail Saudi Arabia taking on the bulk of the new cuts while other countries like Russia, United Arab Emirates (UAE), and Kuwait will share the other part. Russia had been reluctant to sign to previously recommended cuts, but the sharp drop in prices has increased pressure on the group.
An OPEC technical committee on February 8 recommended that OPEC+ extend current production cuts by 600,000 barrels per day and this will see the current pact calls for OPEC+ cuts of 1.7 million barrels a day extend to 2.3 million barrels.
Traders will be looking ahead to the meeting of the 23-nation coalition known as OPEC+ set to meet next week March 5 – 6 in Vienna, Austria.
