ECONOMIC ANALYSIS: Nigeria, Others Fail to Agree on Oil Freeze Deal (By Akinrinde, Ibukunoluwa Jeremiah)

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The meeting to freeze oil supply ended on an inconclusive note; due to Saudi Arabia’s demand for Iran to participate in the freeze talk. This was against earlier agreement and intention for the conveyed meeting; as Iran is bent on ramping up production following the recent lifting of Western sanctions in January. Thus, making a compromise with Iran nearly impossible and a further delay in freezing oil outputs for desired price appreciation.

This matter has delayed the decision of some 18 oil nations, including Russia, in February from reaching a consensus on oil output freeze. As such, this unresolved contention means a worsening global oil supply glut as Novak, Russian oil minister, said that pending when the freeze deal would be reached, the government of Russia would not restrain output.

The implication of this to Nigeria, is that oil prices could decline below the budget threshold of $38 per barrel; which could lead to depletion of existing forex reserve. This, would lead to forex scarcity and follow-on economic consequences.