Good, Bad News As Nigeria’s Oil Grades Near $80 on Israel/Iran Conflict
- Global crude oil prices are rising, with Nigeria’s Bonny Light now nearing $80 per barrel due to the escalating conflict between Israel and Iran
- While this development should be good news for an oil-producing country like Nigeria, it does not bode well for its citizens.
- An increase in dollar inflow is expected to support the naira, but it also means that fuel prices are likely to rise
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Bonny Light, a Nigerian crude oil grade, is now trading near the $80 per barrel mark following the escalating conflict between Israel and Iran.
Also, Brent crude is above $75 a barrel, a critical threshold beyond Nigeria’s 2025 budget benchmark of $75 per barrel.
Source: Getty Images
Checks by Legit.ng on OilPrice.com, a global tracker, showed that on Friday, June 11, Nigeria's crude, Bonny Light, sold at $78.62 per barrel.
Nigeria's crude is the second most expensive among OPEC member countries, only behind Girassol, produced in Angola, sold at $79.56 per barrel.
Why are crude oil prices is on the rise?
Global oil prices jumped after Israel said it had struck Iran in a dramatic escalation of tensions in the Middle East.
JPMorgan analysts wrote on Friday that further Israeli strikes and Iranian retaliation could have a significant impact on global energy markets.
It said:
"Our comfort zone remains with oil prices in the $60-65 range, as sustained gains in energy prices could have a dire impact on inflation, reversing the months-long trend of cooling consumer prices in the US."
Importance of crude oil prices
The rising cost of crude oil is a double-edged sword for Nigeria, as it means more revenue for the government but also drives up costs across the economy, from fuel prices at the pump to the cost of food in supermarkets.
On the positive side, Nigeria is expected to earn more from the surge in crude oil prices.
There had been real concerns when crude prices fell below the budget benchmark of $75 per barrel, hovering around $60 per barrel.
The latest developments have provided a ray of hope for government revenue.
With the expected inflow of dollars from crude oil sales, the Central Bank of Nigeria will now have enough liquidity to defend the naira's value in the foreign exchange market.
Source: Getty Images
Fuel prices to increase
On the flip side, the removal of the fuel subsidy has made Nigerians even more vulnerable to fluctuations in international oil prices.
Currently, petrol pump prices nationwide range from N870 to N910 per litre, depending on the location.
With market forces now determining prices, it is only a matter of time before Nigerians begin to pay more for fuel.
Already, depots have started adjusting prices, and these changes will soon reflect at filling stations.
NNPC adjust fuel pumps below Dangote's rate
Earlier, Legit.ng reported that the NNPC Limited has slashed its petrol pump price at its filling stations as competition with Dangote continues.
The latest change comes days after Dangote refinery instructed its partners to reduce their prices from N890.
The new prices mean that NNPC filling stations are now selling at a cheaper rate compared to Dangote partners.
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Source: Legit.ng
