Crude Oil Price Falls Amidst OPEC Plan To Ease Oil Production Cut

As the meeting of Organization of the Petroleum Exporting Countries (OPEC) nears, crude oil prices dropped by 0.62% in the early hours of today, to trade at $42.94 a barrel at 6.05 am. The decline in oil price could have been influenced by the OPEC planned meeting which is expected to end with a resolution to ease production cut.

The decline wasn't only recorded in Brent crude oil, as the West Texas Intermediate (WTI) crude oil also dropped by 0.72% to trade at $40.26. The fall in oil prices followed a push by OPEC members to increase the oil prices which was negatively impacted by the coronavirus and lockdown initiated globally.

[READ ALSO: NNPC: Mele Kyari Rules Out Oil Price Rise, Projects Collapse]

AllNews recalls that low demand had crashed oil prices. The restriction of movement and shutdown of businesses across the world had caused the low demand, and in order to push the oil prices back up, OPEC compelled members to cut oil production - although countries like Nigeria and Iran didn't comply to the resolution.

OPEC Expected To Ease Oil Production

Although countries that failed to cut oil production in May to June will compensate with more cut in July and August, but OPEC will now hold a technical meeting to decide on easing the production cut. The oil producers have been aggressive on the production cut, but with countries relaxing their lockdown and economies reopening gradually globally, OPEC will slow the production cut.

[READ ALSO: Nigeria's GDP Grew By 1.87% Y-O-Y, As Oil Sector Shake Off COVID-19, Oil Price War]

The decisions being made by OPEC is to ensure balance between oil price and oil production. Surprisingly, OPEC is expected to conclude on easing the production cut after its aggressive run since the oil price war between Saudi Arabia and Russia. AllNews recalls that the oil price war had also contributed to the crash of oil price after both countries flooded the market with oil at a low price in struggle for market share.