Crude oil price hits $65.85 per barrel after OPEC, Non-OPEC meeting

By Udeme Akpan, Energy Editor

Despite supply instability, the price of Nigeria’s premium oil grade, Bonny Light, rose to $116 per barrel, yesterday, from $112 per barrel, recorded last week.

This indicated an excess of $54 per barrel when juxtaposed against the $62 per barrel benchmark price of the 2022 budget, which was also based on the production of 1.8 barrels per day output.

Consequently, some experts and close market watchers said the nation should not expect any threat to the successful implementation of the budget.

For instance, in an interview with Energy Vanguard, an Energy analyst, Dr. Bala Zakka, said: “There is currently no threat to the execution of this year’s budget. We still expect that adequate foreign exchange will be generated to fund the budget.

“But the global market remains very volatile and unpredictable in the coming months, meaning that oil exporting countries, including Nigeria should not put their eggs in one basket. In other words, we need to work towards generating funds from one major product.”

He said the ban on Russian oil by the European Union, EU, has made the oil market to become prone to instability oil than in the past.

Similarly, Chairman, International Energy Services Limited, Dr. Diran Fawibe, said in another interview with Energy Vanguard that, “Russia is the third-largest producer of crude oil in the world after the United States and Saudi Arabia. The supply of crude oil from Russia goes across the world, particularly in Europe and Asia. A lot of Europe countries depend on Russian gas, like Germany, and Ukraine.

“This shows the importance of Russian oil in the world. The effect on pricing has not played out completely. For instance, a million barrels of oil per day, if the sanction takes full effect can cause a major disruption in the world and will spike the price of oil. If about 3 million barrel of crude is removed from the market, automatically price of other grades of crude will rise too.

Referring to Nigeria, he said: “The market might continue to record increased instability as Nigeria will not be able to meet its quota, apparently because of increased pipeline vandalism, oil theft and illegal refining in the Niger Delta.

“Overtime, the oil and gas companies have not been investing much, partly because of the delay associated with the passage of the nation’s Petroleum Industry Bill, PIB, which has now become an Act. Consequently, a lot of investments went to other nations, leading to the low production capacity of the country.

“The nation’s ageing facilities also affected the industry. Unlike in the past when Nigeria was able to increase production to support OPEC whenever other nations had problems, Nigeria cannot do so at this time, we still struggles to produce about 1.2 mbpd as against 1.7mbpd. It is only when we add condensate that is when our production capacity can average at 1.4mbpd.

“It is a major crisis for us as a nation, it just perturbing that we have allowed this to get to this point. A substantial volume of Nigerian crude is been stolen and shipped out of the country.

“We are aware of the recent incident in the Niger Delta which led to the death of over 100 persons. So pathetic that Nigerian security agencies have not been able to curb this menace. We have a major crisis here. There is a big conspiracy going on there.”


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