There seems to be a bit of good news for Nigeria which is largely dependent on oil as its source of revenue, following the heightening geopolitical tension in West Asia, Saudi Arabia that has helped increase the global price of crude oil. The tensions mean that Nigeria will no longer struggle to meet its revenue target and there will be money to carry out various infrastructural projects.
Saudi Arabia’s Abqaiq oil refinery and Khurais oil field, belonging to the state-owned Aramco, were on September 14, attacked by about 10 drones which sparked huge fires. The sites in which the incidents happened accounts for over 5 percent of the global oil supply, spiking the global price of oil. In the early hours of today, September 16, Brent crude futures jumped almost $12 a barrel, to trade at $72. The 18 percent surge was the highest since the futures of Brent crude oil was launched in 1988. United States oil futures traded at more than $61 a barrel during Asia hours — a spike of nearly 10 percent. Earlier, the price jumped as much as 15 percent.
So far, Yemen’s Iran-backed Houthi rebels have claimed responsibility for the attack on Saudi Arabia’s largest oil processing plant. This attack has so far halted production of 5.7 million barrels of crude a day, more than half of Saudi Arabia’s global daily exports and more than 5 percent of the world’s daily crude oil production.
This attack will add the anxiety over the stability of world oil reserves and would lead to a continued increase in the global prices of oil because it is uncertain if this unrest which will affect supply will continue. There is also fears that there could be a potential retaliation by Saudi military on Iran which could also lead to a continuous increase in the prices of crude.
Saudi Arabia had cut back on production of crude oil production, which is part of an OPEC effort to boost prices
It would be recalled that the price of oil had been on a continuous slump. As at last Friday, Brent closed at $60.22 per barrel down from a high of $74.57 in April.
Although this is good news for Nigeria, there are concerns that the excess money that would be generated from this increase will be used to keep the official pump prices.