Nigerians may soon feel the pinch at the pump as international oil prices continue their upward climb, reaching $94.31 per barrel as of Friday, September 15. Diesel and aviation fuel prices are already edging close to the N1,000 per litre mark, raising concerns for businesses, especially in manufacturing and aviation sectors.
“This spike in oil prices is sounding alarm bells for consumers and businesses alike,” warns an industry expert, highlighting the potential ramifications of this price surge.
This surge in oil prices follows previous reports pointing to the impact of oil production cuts in major oil-producing countries such as Saudi Arabia and Russia. These cuts have played a pivotal role in driving up oil prices over the past few weeks.
Back in July 2023, when these production cuts were first announced, Brent crude oil was hovering around $76 per barrel, illustrating the significant jump in prices.
Amena Bakr, the chief OPEC correspondent, emphasized that the prevailing strategy in the oil industry is centered around managing global oil inventories. “OPEC-plus policies are designed to maintain tight control over global oil inventories,” she stated via her Twitter account (X).
As Nigeria seeks to achieve President Bola Tinubu’s ambitious goal of attaining 6% economic growth in the coming year, experts like Tatonga Rusike, the sub-Saharan African Economist at Bank of America, suggest that the country must significantly boost its oil production by approximately 300,000 to 400,000 barrels per day.
However, this goal faces numerous hurdles, particularly in light of the recent surge in Brent crude prices. Nigeria’s challenges include persistent crude oil theft, which continues to grow despite government and security agencies’ efforts to combat it. This insecurity surrounding oil installations could deter investors from viewing the Nigerian oil and gas sector as a viable investment.
While Nigeria should theoretically benefit from the current high oil prices, hovering at a 10-month high of $94.31 per barrel, the inability to refine locally and increase production output has hindered the nation’s ability to capitalize on this favorable market condition.
Moreover, as Saudi Arabia extends its voluntary production cut of 1.3 million barrels per day, many OPEC countries, including Nigeria, struggle to meet their production quotas, further complicating the country’s efforts to stabilize its oil sector.