Oil prices hit $50/barrel, first time since March

Brent Crude price rose to $50.16/barrel at the close of trading on Thursday, showing a gain of over two per cent, while the WTI futures traded at $46.87/barrel.

The $50/barrel mark is the highest price area since March amid positive macros coming from COVID-19 vaccines.

Indeed, Brent crude traded at $50.34/Barrel and the US oil-based contract, West Texas Intermediate futures traded at $46.96/barrel.

This is good news to Nigeria and other oil producing nations (OPEC) whose economies run largely on oil revenue.

Meanwhile, after a week of contentious OPEC+ discussions, in which the UAE played a key role, it appears that the Abu Dhabi National Oil Company (ADNOC) is now aggressively pursuing market share.

The UAE was very vocal during the OPEC+ meeting about its resentment of having to carry the burden of COVID-19 demand destruction and the global energy transition. Abu Dhabi’s Crown Prince Mohammed bin Zayed and ADNOC’s CEO Sultan Ahmed Al Jaber have now clearly decided that it is time to reap the rewards of their large-scale oil and gas investments.

This announcement made by ADNOC that it has awarded US oil company Occidental an oil and gas exploration concession in its second competitive bidding round is a clear sign that the OPEC member is determined to increase production capacity to 5 million bpd by 2030.

Occidental will own 100% of the concession during the exploration phase and will be required to invest around $140 million to explore the 4,212 square kilometer project. This is the second concession given to Occidental by ADNOC. In February 2019, Occidental won Onshore Block 3 in Abu Dhabi’s first competitive bid-round.

According to the agreement, ADNOC will be able to own up to 65% of the concessions during their 35-year production phase. If successful, the ADNOC-Occidental joint venture could provide a much-needed boost to the nation’s oil output. Despite a brutal year for oil markets, ADNOC wants to increase its production capacity by 25% by 2030.

The ADNOC-Occidental news followed last week’s Abu Dhabi Supreme Petroleum Council’s announcement that recoverable unconventional oil reserves have increased by 22 billion barrels, and conventional reserves by two billion. It is expected that several other concession agreements for the 2nd bid round will be soon announced.

It is unclear which companies are favorites to win these concessions, but some Russian companies are expected to do well.