Crude oil falls to $29 per barrel

The Organisation of Petroleum Exporting Countries (OPEC) basket price for oil took a deep dive on Thursday as the commodity fell below $30 for the first time in over a decade.

According to OPEC secretariat calculations released on Thursday, “the price of OPEC basket of thirteen crudes stood at 29.71 dollars a barrel on Wednesday, compared with $31.21 the previous day”.

The story plays out in like manner for Brent crude and US oil, as they both fell below $33 – lowest in over 7 years.

Brent crude fell 4.7 percent to the lowest in 11 years, while US West Texas Intermediate was down by 3.9% to $32.40, its lowest since the 2008 global economic crisis.

The global oversupply have continued to pull oil prices to new lows, leading to approximately 70 percent reduction in value than when the downturn began in June 2014.

John Kilduff, founding partner at Again Capital, told CNBC on Monday that oil prices could go as low as $18 per barrel, following the Saudi-Iran tensions which fuelled soaring prices on Monday.

“I think you’re going to get as low as $18 and maybe get as high as $48. … It’s going to get really ugly,” he told CNBC.

“The Iranians doubled down again, if that’s even possible, by saying that they could put 500,000 more barrels on the market within weeks after the sanctions get lifted.”

US government data shows that the country’s crude production rose by 17,000 barrels, taking its production capacity to 9.22 million barrels a day, raising the likelihood of further oversupply.

Global oversupply is currently within 500,000 to 2 million barrels per day, and could reach 3 million if Iran lives up to its word to add up to one million bpd as soon as possible.

In all of these, Nigeria’s budgetary benchmark for 2016 fiscal year, still stands at overly optimistic $38 per barrel.

The new OPEC reference basket of crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).

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