Fuel scarcity imminent as crude crosses $72 mark, local output rise to 1.81mbpd
Because Nigeria local fuel consumption is clearly dependent on movement of international crude prices, it has become a norm that whenever oil prices are high when the economy is supposed to be happy, the pain of high fuel price become manifest.
Nigeria’s Bonny Light crude oil price jumped to $72, its highest since 2014 at the weekend.
Two major reasons that fueled the rise include Organisation of the Petroleum Exporting Countries (OPEC) led production cuts, and likelihood of the United States taking military action in Syria increases.
However, Nigeria’s crude oil production increased from 1.792mbpd in February to 1.810 mbpd in March as OPEC and its allies including Russia are keeping crude oil supply limits in place in 2018, to reduce a price-denting glut of oil held in inventories.
Since the United State put paid to its pledge that missiles would be fired at Syria, the threat has weakened crude oil supply level thereby leading to higher oil prices.
Nigeria’s Bonny Light attained its highest level at $72.73 a barrel, a little lower than Brent crude oil, which sold for $72.58 per barrels during the trading hours on Friday.
Business Hilights recalls that Bonny Light oil is a high grade of Nigerian crude oil produced in the Niger Delta basin and named after the prolific region around the city of Bonny. The very low sulfur content of Bonny Light crude makes it a highly desired grade for its low corrosiveness to refinery infrastructure and the lower environmental impact of its byproducts in refinery effluent.
The United States West Texas Intermediate (WTI) crude oil also hits $67.39 per barrel at the weekend. In March, the OPEC Reference Basket (ORB) increased by less than 0.5 per cent to $63.76 per barrel. Oil futures ended about one per cent higher in a relatively volatile month, following US equity market movements and supported by robust oil demand growth forecasts, tightening US crude stocks and geopolitical tensions.
Speaking recently on the efforts of OPEC toward price stability, OPEC Secretary General, Mohammad Sanusi Barkindo said that the global energy system is undergoing significant and speedy changes and becoming progressively complex.
According to him, “Our economies are increasingly interwoven. We must build on our common ground to face upcoming challenges together, strive for sustainable market stability and safeguard future energy security through our ongoing effective cooperation. The irreversible forces of globalization will continue to shape this energy transition”.
“We have, through the Declaration of Cooperation, which has become a permanent feature on the global energy scene, established a new framework for producing countries, taking into account the strategic interests of consumer countries as well as the world economy,” Barkindo noted.
