Fear grips Nigeria, other OPEC members over drop in oil price

Following drop in crude oil price in the last one week at the international crude oil market, it appears fear has gripped Nigeria and other 11 members of Organization of PetroleumExporting Countries (OPEC).Brent crude fellbelow $100 a barrel, closing at $96.80 a barrel, for thefirst time in 14 months last week.Top OPEC exporter, Saudi Arabia favours oil at $100, which many othersin the 12-member group also support.It stated that for now, OPEC delegates said they were not alarmed, expectingwinter demand to support prices.But still, signs of concern areemerging about the level of supplies.'As with concern about the drop in oil prices it was a result of weak demand and oversupply mainly from the U.S., recovery in Libya, Nigeria and Iran,' said an OPEC delegate.'But the geopolitics is there and cold weather is approaching, whichwill support prices,' the delegate added.The US shale oil boom is inflating global supplies. Within OPEC, Libyan output has risen and Iraqi exports have mostly continued flowing despite conflicts in those countries, while output has edged up in Nigeria and Iran.Another OPEC delegate said prices were under pressure from too much oil, something some member countries were watching.However most OPEC officials contacted by Reuters continued to see the price drop as short-lived.'The fall in prices is a temporary thing. They are still within the acceptable range. There is no real worry,' said a delegate from one of OPEC's Gulf members.OPEC does not have a official price target and prices still need to fall further to be outside an acceptable zone cited by Saudi Oil Minister Ali al-Naimi in June, when he said oil at '$100, $110, $95 is a good price.'The group has a nominal target to produce 30million barrels per day and in August, pumped more than that level, according to a Reuters survey, due in part to a rise in Libya.Still, Saudi Arabia, Kuwait and the United Arab Emirates could trim supply informally such as to make room for a further recovery in Libya, an OPEC source said in August, although no evidence of thishappening has come to light.Nigeria's 2014 budget was bench-marked at $77.5 per barrel any further drop in crude oil price will pose severe danger for the Nigerian economy.Though the Executive pegged $74 per barrel as benchmark oil price for the budget, the Senate raised it up to $77.5 per barrel as earlier agreed with the House of Representatives before the final consideration of the budget.
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