Just in: Nigeria frets as oil price finally hits $100/barrel

The price of crude oil (Brent) has risen to $100 per barrel in the international market, due mainly to the ongoing Ukraine crisis, a development that is currently causing upset in Nigeria.

Nigeria’s Bonny Light is also affected as the price currently hovers around $96.93 per barrel.

The development may not be any surprise as the oil price had been predicted to rise to $100 per barrel because of a sustainable increase in demand after the COVID-19 lockdown and now the crisis between Russia and Ukraine, which is dragging in other world leaders.

Multiple sources including Vanguard reported a few minutes ago that the price of Brent, usually utilised to benchmark other prices, rose to $103.33 per barrel, from $96 per barrel, in the global market.

There are indications that the prices of other crudes, including Nigeria’s Bonny Light will continue to rise.

But the Nigerian government has expressed concern over the rising international prices of crude oil, saying the increase is not good for the country.

Speaking on the issue in an interview with Bloomberg Television on Wednesday, Minister of State for Petroleum Resources, Mr Timipre Sylva, maintained that Nigeria’s comfort zone in terms of oil prices was between $70 and $80 per barrel.

Although the minister did not particularly explain why higher oil prices were bad for Nigeria, he stated that at the moment the country was not gaining anything from the soaring prices.

The country’s controversial fuel subsidy regime, which would gulp N3 trillion this year and its inability to ramp up production to meet the quota allocated by the Organisation of Petroleum Exporting Countries (OPEC) have limited the gains from the oil price hike.

Sylva blamed the inability of Nigeria to activate the oil wells it shut down when OPEC instructed producing countries to cut production as well as the lack of investment in the upstream sector for the country’s inability to increase production.

At the moment, Nigeria is losing at least 300,000bpd to its capacity challenges.

The minister stated, “I’m hopeful the prices will move around, maybe $80, maybe $70. We are hoping it will come down to somewhere around $70 to $80, which will be sustainable for us to the end of the year.

“We are working hard on that (production increase). What happened to us was the fact that we had to cut back at the time, and, of course, in such a way you can’t really cut back mathematically.

“So, you want to cut back 100,000 barrels that you shut out, maybe we’ll shut down about 200,000 to 300,000 barrels. So at the end of the day, we over-complied because we just couldn’t achieve it mathematically.”