By Kolawole Ojebisi
Nigeria’s oil-dependent economy may be at the receiving end of the decision of the eight Organisation of the Petroleum Exporting Countries +member countries to hike oil production for the month of June.
The OPEC+ member countries made the announcement on Saturday.
This move signals a likely driving down already very low prices at the international market.
Saudi Arabia, along with Russia and six other members of the oil group, will implement a production adjustment of 411,000 barrels a day out of the ground, as in May, according to an OPEC+ statement, whereas the initial plan called for an increase of just 137,000 barrels.
Numbering a total of 22 countries, most of which are highly dependent on oil, the group had until recently been exploiting supply scarcity to boost prices, holding millions of barrels in reserve.
“OPEC+ has just thrown a bombshell at the oil market,” Jorge Leon, analyst with Rystad Energy, told AFP.
“Last month’s decision was a wake-up call. Today’s decision is a definitive message that the Saudi-led group is changing strategy and pursuing market share after years of cutting production,” he added.
There are speculations that the countries may have decided on this course of action to build good relations with Donald Trump’s United States,
The speculations are largely fuelled by Trump’s disposition to Saudi Arabia since he took the reins of power from Joe Biden in January.
Recall that Trump, in the wake of his inauguration into office, called on Saudi Arabia, which heads the cartel, to increase production in order to bring prices down.
Last month, the group slightly lowered its forecast for oil demand growth, citing the impact of US tariffs on the world economy.
OPEC in 2016 came up with OPEC+ to strengthen its weight on the global market.
The eight who have agreed to additional increases are Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
