OPEC+ meets to decide supply policy

Oil producer club OPEC and its allies, known as OPEC+, have recently convened to determine their supply policy as global uncertainties and oil price volatility continue to impact the market. Mayowa Ige, Research Analyst at Financial Derivatives, joined CNBC Africa to provide insights into the current situation in the oil market and what it means for key players like Nigeria. OPEC has been working diligently to stabilize oil prices after a significant decline last year by reducing oversupply. Despite recent increases in oil prices reaching nearly two-year highs, uncertainties persist due to fluctuating demand and ongoing global challenges, such as the third wave of COVID-19 in Europe. In a recent report, OPEC projected a decrease in oil demand, especially in major markets like Europe, further complicating the supply-demand dynamics in the oil market. As a result, it is expected that OPEC will likely maintain its production cuts to exert some control over prices, aiming to keep oil trading around $60 per barrel. Financial derivatives indicate that the market anticipates OPEC's decision to uphold the current production levels to stabilize prices. While there may be slight fluctuations in oil prices following the announcement, the overall outlook suggests stability in the short to medium term, with prices likely hovering between $60 to $65 per barrel. Nigeria, as a major oil producer and revenue earner, stands to benefit from the ongoing rise in oil prices. With oil revenue being a significant source of income for the country, Nigeria's strategy moving forward should focus on maximizing gains from the current price levels of around $60 per barrel. By adhering to OPEC's production quotas and avoiding disruptions in oil supply, Nigeria can capitalize on the improved revenue stream to mitigate fiscal deficits and bolster external reserves. However, given the global shift towards renewable energy and the growing commitment to reducing carbon emissions, Nigeria must also consider diversifying its economy beyond oil. Investing in infrastructure and other sectors will be crucial for the country's long-term sustainability and economic resilience. By leveraging the current oil revenues wisely, Nigeria can position itself for a more diversified and robust economy in the future. These strategic measures will help Nigeria navigate the evolving energy landscape and secure a stable financial footing amidst changing market dynamics.