Prices of many crude oil grades have crashed from over $55 to below $50 per barrel in the global market.
Price of the Organisation of Petroleum Exporting Countries, OPEC, basket of 12 crudes has dropped from $48.99 to $46.69 per barrel, according to OPEC secretariat calculations.
The new OPEC Reference Basket of Crudes, ORB, is made up of the Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
Also, the price of Brent crude, which is usually used to benchmark the prices of other oil grades crashed to $51.10 per barrel.
Traders and close watchers of the volatile market said oil prices would likely continue to fall in the coming weeks because of excess supply and dwindling demand.
Chairman of International Energy Services Limited, Dr. Diran Fawube, said in a telephone interview that the present lull showed that OPEC is no more the sole determinant of the state of the market.
He said the United States of America and some nations in the Middle East have significant influence as they supply commercial crude oil to the market than in the past.
“Unlike in the past, the United States and the Middle East now supply more crude oil to the market. OPEC member states, including Nigeria have lost their control of the market,” he said, adding that the new development clearly explains why OPEC members refused to cut their outputs as doing so would reduce their market share without much impact on prices.
Director General of the Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, said the market situation is a wake-up call on the Federal Government to initiate measures that would culminate in diversification of the nation’s economy.
“The government should as a matter of urgency work towards diversification of our economy because we cannot depend on one commodity,” he said.
However, OPEC stated in its latest report that world economic growth for 2014 and 2015 remains unchanged from the 3.2 per cent and 3.6 per cent, respectively.
“The OECD forecast has been maintained at 1.8 per cent for 2014 and at 2.1per cent for 2015. Figures for both China and India remain unchanged from the previous report at 7.4 per cent and 7.2 per cent for China and 5.5 per cent and 5.8 per cent for India in 2014 and 2015, respectively,” it stated.
It noted that the projections represent a decline of 0.12mb/d from the previous report, mainly as a result of lower-than- expected consumption in the OECD region.
The report stated that for 2015, world oil demand is expected to increase by around 1.12mb/d, some 70tb/d lower than the estimation in the previous report, with total world oil demand expected to reach 92.26mb/d.
“Non-OPEC oil supply in 2014 is estimated to grow by 1.72mb/d to average 55.95mb/d. This represents an upward revision of 4.0tb/d over the last report and is 0.58mb/d higher than the initial forecast, of which 0.31mb/d is due to an upward revision to the 2013 base-year figure,” it stated, adding that OECD Americas is expected to be the main driver for oil supply growth, followed by Latin America.
In 2015, non-OPEC oil supply is forecast to increase by 1.36mb/d to average 57.31 mb/d, representing an upward revision of 0.12 mb/d over the previous report.
