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Good, bad news for Nigeria as Oil sells above $80
On Monday, oil prices sold above $80 per barrel, a massive 100 percent difference from the $40 per barrel projected in the 2021 budget.
Monday closing rate for the international crude benchmark represents a sixth day consecutive rice as demand continue to outweigh supply.
In fact, the last time, brent crude sold above $80 was in October 2018.
Oil’s latest upswing has come with a flurry of bullish price predictions from banks and traders, further gains, and speculations that the energy industry isn’t investing enough in fossil fuels to keep supplies at current levels.
Goldman Sachs, Bank of America project oil price near $100 on winter demand
Ripples Nigeria had earlier reported that Investments banks, Goldman Sachs and Bank of America, have projected the crude oil price to hit between $85 and $100 in the coming months.
In a note published on Friday, Goldman Sachs predicted $80 per barrel oil price for the last quarter of 2021 while the Bank of America Global Research predicted a higher oil price of $100 per barrel over the next six months.
Read also: Oil price hits two-month high, but Nigeria not producing enough to tap into gains
According to them a colder-than-usual winter could be the most important driver of global energy markets in the coming months.
Trafigura Group, the world’s largest commodity trading houses, has also forecasted higher oil prices.
The headache
The rising oil price has created double headache for the country.
Not only is Nigeria struggling with crude production due to disruption and pipeline vandalism, the rising oil price will also mean Nigeria will have to spend more first on importing and also paying fuel subsidy to keep it low.
In 2021 alone, report from the Nigerian National Petroleum Corporation shows that N905 billion has been spent on fuel subsidy so far.
With rising oil price approaching $100 the cost of keeping fuel low in the country will hit N2 trillion by the end of the year.
In June this year, Mele Kyari group managing director of the Nigerian National Petroleum Corporation (NNPC) said rising crude oil prices will cause problems for resource-dependent countries such as Nigeria.
He had lamented that oil prices above $70-$80 will create major problem for the country.
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