THERE were fresh fears over the successful implementation of Nigeria's 2024 budget as the price of Bonny Light dropped to $76.19 per barrel in the global market.
This indicates a shortfall of $1.77 per barrel when compared to the budget benchmark price of $77.96 and 1.69 million barrels per day oil output.
Checks by Vanguard showed that there was a general drop in the prices of many crudes, due to a sharp price cuts by top exporter Saudi Arabia and a rise in the Organisation of Petroleum Exporting Countries, OPEC output, offsetting supply concerns generated by escalating geopolitical tension in the Middle East.
Brent crude slid $2.63, or 3.3%, to $76.13 a barrel by 11:11 a.m. EST (1611 GMT), while U.S. West Texas Intermediate crude futures lost $2.94, or 4%, to $70.87 a barrel.
According to Reuters, both contracts climbed more than 2% in the first week of 2024 on intensifying geopolitical risk in the Middle East after attacks by Yemen's Houthis on ships in the Red Sea.
On Sunday rising supply and competition with rival producers prompted Saudi Arabia to cut the February official selling price (OSP) of its flagship Arab Light crude to Asia to the lowest level in 27 months.
"That's raising concerns about demand in China and global demand as well," Price Futures Group analyst Phil Flynn said. "The stock market is off to a weak start this year and this news from Saudi Arabia has caused the bottom to fall out."
A Reuters survey on Friday found that OPEC oil output rose in December as increases in Iraq, Angola and Nigeria offset continuing cuts by Saudi Arabia and other members of the wider OPEC+ alliance.
The boost came ahead of further OPEC+ cuts in 2024 and Angola's exit from OPEC, which are set to lower January output and market share.
"If we were just to focus on the fundamentals, including higher inventories, higher OPEC/non-OPEC production and a lower than expected Saudi OSP, it would be impossible to be anything other than bearish on crude oil," said IG analyst Tony Sycamore.
"However, that doesn't take into account the fact that geopolitical tensions in the Middle East are undeniably rising again, which will mean limited downside."U.S. Secretary of State Antony Blinken held more talks with Arab leaders on Monday as part of a diplomatic push to stop the war in Gaza from spreading further.
