Good, Bad News for Nigeria as Global Crude Oil Prices Rise to Highest Level in 2023
- Global crude oil is now nearing $90 per barrel and is trading at the highest level since 2023
- While this increase should come as good news for an oil-producing country like Nigeria, it is not good news for its citizens
- Not only is Nigeria still struggling to meet its production quota, but the removal of the fuel subsidy and lack of working refineries also foretell an increase in petrol pump price
Unlock the best of Legit.ng on Pinterest! Subscribe now and get your daily inspiration!
Brent crude, the international benchmark for crude oil prices, raced to $87.15 per barrel during the intra-day trading on Wednesday, August 8, 2023.
Checks by Legit.ng on oilprice.com- a global tracker, showed the price on Wednesday was the highest crude oil has reached since the start of 2023.
Source: Getty Images
Similarly, West Texas Intermediate crude US specification data shows it trades above $84 per barrel- a year-to-date high.
Why crude oil prices are on the rise
Crude prices have risen since June, primarily because of extended, voluntary cuts to Saudi Arabia’s crude oil production and increasing global demand.
PAY ATTENTION: Share your outstanding story with our editors! Please reach us through info@corp.legit.ng!
A report by the US Energy Information Administration (EIA) projected the rise will continue amid the pressures from the ongoing Russian invasion of Ukraine war.
In one of its reports, EIA said:
"Rising global oil production in 2024 is expected to keep pace with oil demand and put downward pressure on crude oil prices beginning in the second quarter of 2024."
What rising oil prices mean for Nigerians
The rising oil prices should be good news for Nigeria, as it means the government will earn more from selling its crude oil.
On the flip side, Nigeria remains a largely import-dependent country for refined products, implying that the rising global oil prices will require more dollars to bring in refined crude oil products.
The removal of the fuel subsidy has made the fate of Nigerians even more susceptible to changes in international oil prices.
Currently, petrol pump prices nationwide are set at N560 to N640 per litre.
With the current regime of market forces determining the price, it is only a matter of time before Nigerians pay N700 per litre.
Mele Kyari, the group managing director of Nigerian National Petroleum Company Limited (NNPCL), has always put the comfort zone for oil prices at $58-$60, saying that anything above $70-$80 will add more difficulties.
CBN faces another headache as Nigeria’s foreign reserves fall to 2-year low
Meanwhile, in another report, Legit.ng revealed that Nigeria's foreign reserves are now at a two-year low.
The latest data from the CBN showed that Nigeria's reserves dropped to $33 billion amid reduced earnings from crude oil sales.
The foreign reserves are a vital firepower for CBN in its fight to ensure the naira stays strong against other currencies.
Source: Legit.ng
