Brent crude oil plunges to $68

By Nneka Nwogwugwu

The international oil benchmark, Brent crude, has plunged to $68 per barrel mark on Monday after the Organisation of the Petroleum Exporting Countries and its allies agreed to increase their production by 400,000 barrels per day starting from August.

Brent, against which Nigeria’s crude oil is priced, fell by $5.01 to $68.58 per barrel as of 7:25pm Nigerian time on Monday, the lowest level since May 21.

After two and a half weeks of wrangling, OPEC and its allies, a group called OPEC+, resolved on Sunday to increase their overall production by 400,000bpd on a monthly basis starting from August until phasing out the 5.8 million bpd production adjustment.

The alliance also granted five countries – Saudi Arabia, Russia, the UAE, Iraq and Kuwait – even higher output targets starting in May 2022, according to S&P Global Platts.

The OPEC+ resolution puts an end to an acrimonious spat between Saudi Arabia and the UAE, which had arisen after the UAE had objected to Saudi Arabia’s plan to tie OPEC+ production increases to a lengthening of the supply management pact.

The UAE had insisted that its baseline production level, from which its quota is determined, be raised first.

In an appeasement to the UAE, the country will receive a 332,000 bpd boost to its reference production level, from which quotas are determined, starting in May 2022.

Meanwhile, Saudi Arabia and Russia will also be granted 500,000 bpd baseline increases, with Iraq and Kuwait getting 150,000 bpd rises.