LONDON — Oil forged fresh 12-year lows Tuesday on global oversupply, prompting OPEC member Nigeria to call for an emergency meet to address collapsing prices that has ravaged revenues.
In early morning deals, New York’s benchmark West Texas Intermediate (WTI) for February delivery tanked to $30.41 a barrel, which was the lowest level since December 3, 2003.
Europe’s Brent North Sea crude for February dived to $30.43, a point last seen on April 6, 2004.
Nigerian petroleum resources minister Emmanuel Ibe Kachikwu declared that he expects an extraordinary meeting of the oil cartel in “early March” to discuss nosediving crude prices.
“We did say that if it (the price) hits the 35 (dollar per barrel), we will begin to look (at)... an extraordinary meeting,” said Kachikwu, whose term as OPEC president finished in December.
The prices have hit levels that necessitate a meeting, he told an energy forum in Abu Dhabi, but added that he not yet confirmed with fellow OPEC ministers if they would be willing to attend.
“The prospect of a meeting is definitely capping losses for the day and driving prices back towards $32, however I cannot see it stopping the slide in the longer term,” said analyst James Hughes at trading firm GKFX.
“The call for the meeting is not necessarily a surprise as we have lost almost 20 percent since the start of the year and are looking to test $20 a barrel.”
In midday deals on Tuesday, Brent prices rebounded by 25 cents to $31.82, while WTI clawed back ground to stand at $31.30, down 11 cents from Monday’s close.
Saudi-led Gulf exporters within the Organization of Petroleum Exporting Countries (OPEC) have so far refused to cut production to curb sliding prices, seeking to protect their market share despite a heavy blow to their revenues.
Kachikwu said member states differ on the issue of intervention. “One group feels there is a need to intervene. The other group feels even if we did, we are only 30 to 35 percent of the producers really”, as 65 percent of supply comes from non-OPEC countries, he said at the Gulf Intelligence UAE Energy Forum.
Nigeria, Africa’s largest economy and foremost oil producer, has been ravaged by collapsing oil prices in recent years because crude accounts for 90 percent of the nation’s export earnings and 70 percent of overall government revenue.
“The reported breakeven price for Nigeria is around $87 a barrel and with price looking so much weaker its no surprise if they are one of the countries asking for a meeting before the next scheduled one in June,” added Hughes, noting rumors that other OPEC members also wanted an exceptional gathering.
OPEC refused to slash output at its scheduled production meetings in June and December last year, despite a collapse in prices since July 2014, when the market stood above $100 per barrel.
The policy is aimed at pushing oil prices lower to squeeze US shale producers out of the market. However, it has slammed smaller producing nations like Nigeria and Venezuela.
“OPEC has taken a big gamble that hasn’t really worked so far,” said analyst Fawad Razaqzada at Gain Capital.
“Essentially, the smaller OPEC members, who are struggling really badly, are unlikely to be able to persuade the Saudis to make a U-turn on its policy of maintaining market share.”
Crude futures plummeted 10 percent last week, also on fears about the global supply glut and demand weakness in China, the world’s biggest energy user.
The rise in the greenback, which makes dollar-priced oil more expensive for holders of weaker currencies, has dented prices as well.
