World’s largest independent crude oil trader, Vitol, believes people might stop purchasing the commodity as price rises in global market – a situation being experienced in Nigeria.
The oil major’s head of Asia, Mike Muller, said expensive energy will deplete demand as Ripples Nigeria understands that high price will affect consumer behaviour towards crude oil and it’s related products.
As of the time of filing this report early Tuesday, crude oil price hovered around $86.48 per barrel, against the $20 it sold for in March 2020 – reflecting strong recovery in the market.
Muller cited natural gas as example while speaking with Bloomberg on Monday, stating that low consumption among industrial users has been trailing the commodity’s high price.
Although, he opined that crude oil – despite gaining 10 percent year-to-date, promised further movement if output tightening continues, hasn’t gotten to the level where it discourages buyers.
The Vitol exec said gas “remind us that people will abstain from buying expensive energy at some point,” even though Muller admitted that “These prices are justified.”
Muller said concerns should be directed at “what point that (high price) affects the oil market.” For example, Ripples Nigeria reported a deadlock between the government and labour leaders to settle on implementation of global price in the Nigerian market.
Nigerians already resisting expensive petrol price
Since Q1 2021, the government hasn’t reviewed the price of fuel at retail stations despite increase in landing cost, spending N2.88 billion daily to keep fuel price at N162-N171 per litre.
Initially, the pump price was raised to N212.6 per litre by the Petroleum Product Pricing Regulatory Agency (PPPRA) in its petroleum pricing template report published on its website, but in a swift move, it denied the increment on its Twitter page.
As at the end of March 2021, global crude oil price was pegged at $62.74, but has appreciated by 37.83 percent, adding $23.74 to its asking price within almost ten months.
Despite the robust recovery of the crude oil price and substantial increase in the landing cost, there have been no changes at the retail price by the government to avoid labour’s strike.
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