Nigeria, Saudi Arabia in talks to stimulate oil price

Nigeria and Saudi Arabia are holding talks to stimulate oil price that has bottomed out over the last 20 months, Presidential spokesperson, Garba Shehu, has said.

President Muhammadu Buhari who is on a visit to Riyadh, Saudi Arabia, to discuss ways to stabilise prices, was quoted to have told Saudi Arabia’s King Salman, that the two countries need to work together to achieve a stable oil market

Nigeria, Africa’s biggest oil producer, has been suffering from a slump in crude prices that has eroded vital oil revenues and hammering its currency.

“The two leaders accepted the fact that their two economies are tied to oil and that all cannot be well with both countries when the world oil market is unstable,” said Buhari’s spokesman, Shehu.

They therefore committed themselves to doing all that is possible to stabilise the market and rebound the oil price,” he added. Russia, Saudi Arabia, Qatar and Venezuela said last week, had after talks in Doha last week, agreed that they were ready to freeze production at January levels if other producers did the same.

Iran’s Oil Minister was quoted on Tuesday as saying the proposal was “laughable” because it did not allow that country to regain market share it lost during sanctions. But during his visit to Riyadh, Buhari is expected to fly to Doha to discuss oil price stability with Qatar’s ruler.

Meanwhile, oil prices fell 4 per cent on Tuesday, sliding to $33.36 per barrel, after Saudi Oil Minister, Ali Al-Naimi, ruled out any production cuts, restating the Kingdom’s rationale for maintaining output was that demand would pick up excess crude that has crushed prices over the past 20 months.

Big oil exporters, Saudi Arabia and Russia, have proposed to freeze output at January levels, which were near record highs, only if other producers also do the same.

More meetings on the potential freezes will be held in March, Al-Naimi told the IHS CERA week conference in Houston, adding that he expects most of the countries that count to freeze crude production levels. Analysts remain skeptical that the cuts will be effective in rebalancing the market.

“If they freeze production at January levels when you’re already over supplied by around a million barrels per day, it just prolongs that situation of oversupply,” said Energy Aspects’ analyst, Dominic Haywood.