Oil prices hit one-year high yesterday, as Russian President Vladimir Putin said his country would join the Organisation of Petroleum Exporting Countries (OPEC) in implementing an output freeze.
Speaking at the World Energy Congress in Istanbul, Turkey, Putin signalled that his country, which is one of the top three producers of oil, may even agree to a production cut to drive market stability.
Brent Crude, the international benchmark for oil, was trading at $53.55 in London yesterday, while West Texas Intermediate (WTI) was going for $51.45 per barrel.
This is welcome development for Nigeria which has its 2016 budget pegged at $38 per barrel oil benchmark but has faced severe shut in and force majeure by oil majors as a result of vandalism by militants from the volatile oil rich Niger Delta region.
Putin said: “Russia is ready to join the joint measures to cap production and is calling for other oil exporters to join. We support the recent initiative of OPEC to fix oil production limits.
“We hope that at the OPEC meeting in November, the idea will be embodied in an official agreement, giving a positive signal to the markets and investors.
“The demand for traditional energy supported not only the motorisation and electrification of such huge countries and economies as China and India, but also by the continuing participation of oil and gas products in the most diverse areas of human life, in industrial processes.”
OPEC concluded at its 170th ordinary meeting in Algiers, that the oil cartel was going to peg output between 32.50 million barrels per day (bpd) to 33.0 million bpd.
The deal will see OPEC drop 600,000 barrels of its current market share of 33.6 million bpd.
OPEC Secretary-General, Sanusi Barkindo, who spoke on the sidelines of the World Bank/IMF meetings in Washington, had earlier said he was optimistic that the prices would go up after the congress in Istanbul.
