Boom for Nigeria as Oil Prices hit $73.79 a barrel
An improvement in Nigeria’s oil earnings is on course as prices held firm on Friday near three-year highs reached earlier this week as ongoing OPEC-led supply cuts, as well as strong demand, gradually draw down excess supplies.
Brent crude oil futures were up at 73.79 dollars per barrel at 0440 GMT. U.S. West Texas Intermediate (WTI) crude futures down 2 cents at 68.40 dollars a barrel.
Both Brent, which Nigeria produces, and WTI hit their highest levels since November 2014 on Thursday, at 74.75 and 69.56 dollars per barrel respectively.
WTI is set for its second weekly gain. Oil prices have been pushed up by a gradually tightening market.
Led by top exporter Saudi Arabia, the Organization of Petroleum Exporting Countries (OPEC), has been withholding production since 2017 to draw down a global supply overhang.
The tighter oil market is feeding into refined products. Oil supply tightness is also a result of healthy oil demand.
Beyond OPEC’s supply management, crude prices have also been supported by an expectation that the United States will re-introduce sanctions on OPEC-member Iran. Nigeria’s income from crude oil export has lately been boosted, fortuitously, by the unexpected rise in crude oil prices, beyond the 2017 budget benchmark of $44.5/barrel. This favourable outcome which is evidently buoyed by OPEC’s strategic supply management, should ordinarily be a blessing to our economy. Indeed, such optimism on oil price may also be sustained by the International Energy Agency’s January 2018 Oil Market Report, which projects oil price to remain between $60-$70/barrel this year.
The question, however, is whether the present over 50% rise in crude price and export dollar earnings will also trickle down to increase consumer demand and trigger an expansion in Manufacturing and Agro-allied Industries. Furthermore, will such expansion lead to the creation of more jobs and less poverty?