The Organisation of Petroleum Exporting Countries (OPEC) says the gradual rollout of vaccines around the world is a positive factor that would boost the global economy and oil demand for the rest of the year.
Oil prices have been on a tear since late last year, hitting $58 on Wednesday, its highest in 12 months.
OPEC, at the end of its 26th joint ministerial monitoring committee meeting, on Wednesday, pledged to achieve full conformity and make up for previous compensation short-falls, noting that economic prospects and oil demand would remain uncertain in the coming months.
It also stressed the importance of accelerating market rebalancing without delay, noting the progress of Nigeria in this respect.
“The Committee noted, with gratitude, the significant additional voluntary supply adjustment made by Saudi Arabia, taking effect on 1 February 2021 for two months, exemplifying its leadership, and the need for a flexible and pre-emptive approach by all DoC members,” OPEC said.
“The Committee noted that since the April 2020Ministerial Meeting, OPEC and non-OPEC countries have adjusted oil production down by a cumulative 2.1 billion barrels, stabilizing the oil market and accelerating the rebalancing process.
“The Committee reminded all Participating Countries to remain vigilant and flexible given the uncertain market conditions, and to stay on the course, which has hitherto reaped rewards.”
The recovery would come as a good news to Nigeria, Africa’s largest economy, as it depends on earnings from oil to finance its N13.588 trillion 2021 budget.
The budget has a benchmark oil price of $40 per barrel; daily oil production estimate of 1.86 million barrels (inclusive of condensates of 300,000 to 400,000 barrels per day); exchange rate of N379 per US Dollar; GDP growth projected at three per cent; and inflation closing at 11.95 per cent.