Breaking: Oil Price Rises to $112 a Barrel, Petrol Subsidy Under Threat
- Following the attack on Ukraine by By President Vladimir Putin of Russia, the price of global oil has risen
- This however will likely have adverse effects on Nigeria as the country will have to pay more for fuel subsidy
- Brent crude was trading up 7.80% to $112.70 per barrel — up nearly $8 per barrel from Tuesday and the highest since February 2011
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Global oil prices pulled a surprise on Tuesday, March 1, trading above $110 a barrel amid supply disruptions following Russia’s invasion of Ukraine.
High oil prices mean more subsidy payments for the Nigerian government to sell petrol below the international market rate.
The development is coming even as the United States and other member states of the International Energy Agency (IEA) agreed to release 60 million barrels of oil reserves to tame rising prices.
Brent crude was trading up 7.80% to $112.70 per barrel — up nearly $8 per barrel from Tuesday and the highest since February 2011.
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West Texas Intermediate Crude futures proportionally gained 7.54 percent to $110.95 a barrel.
OPEC and its allies will meet today for crucial talks on monthly output for April 2022.
Oil nears $90, the Highest Level Since 2014 When Goodluck Jonathan Was President,
The price of oil raced towards $90 a barrel and it also traded at the highest level since the administration of Goodluck Jonathan.
Before the end of 2021, there was a flurry of projections that oil prices could hit $90 and $100 a barrel.
With reported disruption in the Middle East including a key pipeline running from Iraq to Turkey it is looking increasingly possible oil will hit $90 in days
According to Bloomberg, on the morning of Wednesday, 18 January 2021, crude oil price was sold at $88.69.
Wednesday's price represents an eight-day consecutive rise as demand continues to outweigh supply.
Nigeria's oil revenue performance
In the first eight months of 2021, Nigeria's oil output averaged 1.52 million barrels per day, compared to a budget of 1.86 million barrels per day and a capability of more than 2 million barrels per day.
Due to these difficulties, Nigerian oil revenue was N754.2 billion, or 43.7 per cent or N586.52 billion less than the N1.34 billion forecast in the 2021 budget.
Meanwhile, figures from the Nigerian National Petroleum Corporation indicated that subsidy payments increased to N1.15 trillion in the first 11 months of 2021.
Nigeria has only $60 million left in its excess crude account
Meanwhile, It is almost game over for Nigeria and one big withdrawal from the excess crude account could see it drop to an unredeemable state.
According to reports, Nigeria excess crude account has dropped significantly to just over $72 million.
Even with oil trading above the expected price, Nigeria cannot save its oil revenue for which the ECA is created.