Nigeria’s 2020 budget based on a $57 oil price will be further put under strain after oil prices crashed below $50 on Friday, following the collapse of output cuts between OPEC and OPEC+ led by Russia.
Russia balked at supporting the move initiated by OPEC in response to weak demands in the season of coronavirus that has pummelled global economy.
Oil prices were in free fall after the talks for a 1.5m barrels cut collapsed. Brent dropped almost 8 percent at $46.16 a barrel and West Texas Intermediate fell 7.8% at $42.33.
Failure to secure a deal between OPEC, Russia and other members of an alliance known as OPEC+ that has propped up prices since 2016 could send weak oil prices into tailspin.
A high-level Russian source and two OPEC sources told Reuters Russian Energy Minister Alexander Novak told OPEC that Moscow was only ready to discuss extending existing output cuts.
“That position won’t change,” the Russian source said as OPEC+ ministers gathered at OPEC’s Vienna headquarters, where formal talks designed to thrash out a deal were postponed for hours as ministers held bilateral talks.
Earlier today UAE’s energy minister Suhail al-Mazrouei said he did not expect OPEC to go ahead and cut without Russia, even though his Nigerian counterpart Timipre Sylva admitted the cartel would have to cut even if Russia does not get on board with the additional cuts.
“That’s really not going to be very good for us but we expect a deal,” Sylva said as quoted by S&P Global Platts.
Ministers from the Organization of the Petroleum Exporting Countries said the coronavirus outbreak had created an “unprecedented situation” that demanded action, as measures to stop the virus spreading dampens global economic activity and oil demand.
Forecasts for 2020 demand growth have been slashed but Moscow has long argued it was too early to assess the impact and sources said Novak delivered the same message on Friday.