The price of oil in the international market has continued to plummet thereby raising concerns among oil-rich countries.
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Global oil benchmark, Brent crude, fell further on Monday amid talk of a possible release from global crude reserves, according to data from the International Monetary Fund showing a slowdown in global economic growth and the potential for United States waivers on Iran oil sanctions.
Brent, against which Nigeria’s oil is priced, dropped by $3.18 to $72.15 per barrel as of 8:30pm Nigerian time.
“The market is on the defensive because of the potential release of oil from global reserves,” said a senior market analyst at Price Futures Group, Phil Flynn, according to MarketWatch.
The President Donald Trump administration is considering a release from the US Strategic Petroleum Reserve, though a draw down from the stockpile of crude is not imminent, The Wall Street Journal reported on Friday, citing people familiar with the matter.
The US government is “coming under increased pressure as a result of rising gasoline prices, with national average gasoline prices up almost 16 per cent since the start of the year,” according to analysts at ING Bank.
The Director of the International Energy Agency, Fatih Birol, also said at a private dinner last month that a release from global oil reserves was an option if supply outages worsen, the WSJ reported, citing dinner attendees.
Traders also fretted over a potential slowdown in the global economy, which could hurt demand for oil. The IMF on Monday said that growth was slowing in the euro area, Japan and the United Kingdom and warned that a further escalation of trade tensions stood as the greatest near-term threat to global growth.
Meanwhile, a highly anticipated meeting between Trump and his Russian counterpart, Vladimir Putin, did not appear to offer any significant news for the oil market, despite expectations that Trump would push for stronger oil production from Russia to help ease crude prices.
During a press conference, Putin suggested that Russia and the US, as major oil and gas powers, could work together on regulation of international markets.