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Oil prices fall due to Russia’s gradual output increase threat to Nigeria revenue projections

Though global oil prices eased on Friday as Russia hinted it may gradually increase output, after having withheld supplies in concert with producer cartel OPEC since 2017, industry observers say the development may spell doom for the Nigerian economy which had remained dependent on the product sales.

Besides, the fear is coming mostly from the fact that the National Assembly jerked up the preferred budget oil benchmark of $45 to $51 possibly without recourse to possible drop of oil prices below the benchmark any time soon.

Weekend, Brent crude futures LCOc1 were at $78.63 per barrel at 0534 GMT, down 16 cents from their last close, and more than 2.2 percent below the $80.50 multi-year high they reached on May 17. Brent broke through $80 for the first time in more than three years earlier in May. U.S. West Texas Intermediate (WTI) crude futures were at $70.60 a barrel, down 11 cents from their last settlement. Oil prices are now starting to drift a little,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader, adding that this was due to OPEC’s and Russia’s “moves toward an increase in production” at a meeting scheduled for next month. The Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) as well as a group of non-OPEC producers led by Russia started withholding output in 2017 to tighten the market and prop up prices.

But Russia, in particular, has been floating a potential end to the production cuts, with energy minister Alexander Novak saying on Thursday that restrictions on oil production could be eased “softly” if OPEC and non-OPEC countries see the oil market balancing in June.