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Oil price jumps 3.5% after touching its lowest



The international oil benchmark, Brent crude, against which Nigeria’s crude oil is priced sustained its recovery as price rose by 3.5 percent, or $2.44, to $71.11 per barrel on Tuesday, after days of weak sales.

While the United States West Texas Intermediate (WTI) also rose by $2.08 or 3.17 percent to $67.72 per barrel.

Concerns about global demand drove the price of oil to its lowest level since May 21 on Monday, at $64.60, before rebounding by more than 5%.

However, the surge in the commodity’s price was aided in part by a supply disruption in Mexico as a fire at an oil platform off Mexico cut state-run Pemex’s oil production by about 25 percent.

Reports show that five workers died and the fire injured six others. Currently, the platform and 125 wells are offline, which reduced Mexico’s crude oil production by 421,000 barrels per day.

China, the world’s top crude oil importer, has reported no Covid-19 cases in recent days, and this has helped increase oil demand.

Meanwhile, group Managing Director of Nigerian National Petroleum Corporation (NNPC) Mele Kyari, has said the allocation of three per cent oil companies operating expense to host communities was higher than 30 per cent of profit oil and gas for frontier exploration.

Read also: Oil price opens the week at $73 per barrel

Kyari who disclosed this when he appeared on an NTA interview programme, explained that the allocation for host communities has a low percentage but a bigger value

He said: “For instance, when you say 30 per cent profit oil and gas from NNPC shares or from PSC, it is a very small number. The percentages appear very outrageous but 30 per cent of what? Nobody has sat down to look at it. When you say profit oil 30 per cent, it probably comes down to less than $400 million per annum.

“But when you come to the host communities, you have three per cent of our operating expense. We spent about $16 billion in fiscal 2020 in our operating expense across the industry. So, when you take three per cent of that number, it comes to $500 million, which is far above the budget of NDDC.

You can see that those percentages don’t reflect the realities that we are trying to achieve by this. And for profit oil, there are lots of uncertainties around it because if you don’t make profit it is zero but you must spend money to do operating expense.

“We are very sure that the provisions that are meant for host communities will be implemented and delivered,” he said.

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