Brent crude futures fell by 49 cents, or 0.63%, to $77.87 per barrel, marking the first time it closed below $80 since February 7th. This followed a more than 3% drop on Monday.
The decline in oil prices continued, reaching their lowest levels in four months due to concerns about increased supply later this year and cautious demand forecasts from major U.S. consumers.
Similarly, U.S. West Texas Intermediate (WTI) crude futures decreased by 51 cents, or 0.51%, to $73.71. This came after WTI settled near a four-month low on Monday, having slid 3.6%. Current prices remain close to Nigeria’s benchmark crude oil price of $78 set in the 2024 budget.
Over the weekend, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (collectively known as OPEC+), agreed to extend most of their oil output cuts until 2025. However, they allowed some voluntary cuts from eight members to be gradually lifted starting in October. The group is expected to produce 39.7 million barrels per day, with Saudi Arabia and Russia holding the largest daily quotas at 10.4 million and 9.9 million barrels, respectively.
Despite Nigeria’s plans to produce 2 million barrels per day by 2025, OPEC+ extended Nigeria’s quota of 1.5 million barrels per day into 2025. This decision necessitates that Nigeria consider the OPEC+ quota in its 2025 budget planning or follow Angola’s example of exiting after receiving a lower-than-expected quota.
Additionally, the Joint Ministerial Monitoring Committee (JMMC) granted itself the authority to hold regular meetings to review market conditions for OPEC and non-OPEC members and extended the assessment period for the year 2026 until November 2025.
Oil prices have been falling over the past two months due to easing geopolitical tensions and weakening demand, with signs of a softening physical market indicated by Brent’s prompt spread narrowing to 13 cents. On Monday, the average gasoline price in the U.S. dropped by 5.8 cents to $3.50 per gallon.
The U.S. government is set to release inventory and product-supplied data on Wednesday. The product-supplied figure, often viewed as a gauge for demand, will reveal the extent of gasoline consumption over the Memorial Day weekend, marking the beginning of the U.S. driving season. Analysts believe that concerns about these macroeconomic indicators from the world’s leading oil consumer will continue to affect prices in the near term.
