- Oil price drops to 7% to $46 per barrel on Friday.
- Amid the coronavirus outbreak, the OPEC wants a cut in oil production to tame low prices and production by protecting allies.
- At Friday's meeting, OPEC and Russia fail to agree on a production cut.
Oil prices dropped below $50 per barrel again on Friday, shedding 7% as Russia reportedly defiled talks with the Organisation of the Petroleum Exporting Countries (OPEC) for output cuts.
Amid the coronavirus outbreak, the OPEC has asked for a cut in oil production to tame low prices and production by protecting its members.
Brent crude oil, the international oil benchmark, dropped 7% to $46 per barrel while WTI also erased 8% to $42 per barrel.
What is happening?
OPEC proposed making substantial production cuts to head off another price slide.
On Thursday, February 5th, 2020, the oil cartel met in Vienna and announced a proposed 1.5 million barrels per day (mb/d) of additional cuts without Russia's input.
The idea calls for OPEC itself cutting by 1 mb/d, and the non-OPEC coalition reducing output by 0.5 mb/d. In a statement, OPEC said the COVID-19 outbreak has had a major adverse impact on global economic and oil demand forecasts in 2020, particularly for the first and second quarters.
According to reports, Russia on Friday resisted pressure from his OPEC allies to make deeper production cuts, pushing the cartel’s high-stakes diplomatic gamble to the brink of failure and sending oil prices plunging.
Why would this affect you
Nigeria as a country relies solely on oil price and production, pegging production at 2.18m barrel per day and price at $57 per barrel. Any shortfall may spell doom for the nation's economy and change the direction of the economy.
Some of the resultant effects will be on foreign reserves, affecting, exchange rate - Naira to dollar, and businesses.