Nigeria has backed Saudi Arabia’s call on the Organisation of Petroleum Exporting Countries to address the disconnect between paper and physical oil markets, which is causing some volatility in the international oil industry.
Physical market prices are determined by the supply and demand for physical crude where traders buy oil from the producer and sell it to the refiner for immediate delivery. Futures prices, on the other hand, are determined by the supply and demand for crude futures positions. Futures markets provide traders with a means to bet on crude prices at certain points in the future, and also allows physical market participants to hedge their position and, therefore, minimise risk.
“As such, any measure required to ensure the stability of the oil market, whenever it is necessary, will always be comprehensively supported by Nigeria,” S&P Global quoted the Minister of State, Petroleum, Mr Timipre Sylva, as saying.