Nigeria, oil firms earn $4bn windfall from Middle East crisis

By Babajide Komolafe & Udeme Akpan 

There are indications that Nigeria and oil firms have earned about $4 billion from the rise in price of crude oil triggered by the US/Israel-Iran war now in its seventh week.  

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The war that started on February 28th has so far lasted for 52 days as of yesterday.  

Vanguard analysis of data from the Central Bank of Nigeria, CBN, showed that prior to the outbreak of the war on February 28th, the average price of Nigeria’s Bonny Light crude oil,    year-to-date, stood at $70.14 per barrel.  

Further analysis showed that during the 52 days of the war, the average price of Bonny Light rose to $116.84   per barrel, representing a 66.6 per cent increase.

Data obtained from the Nigerian Upstream Petroleum Regulatory Commission showed that Nigeria’s oil output rose to 1.546 million bpd in March from 1.483 million bpd in February.  

At the pre-crisis average price of Bonny Light, $70.14 per barrel,   this   production level   in 52 days yields $5.64   billion oil revenue.  

However, at the post crisis average price of Bonny Light price, $116.84 per barrel, this production   level   will yield $9.393   billion oil revenue in 52 days.  

This translates to a windfall of $4 billion for the Nigerian government and oil firms operating in the country.  

Meanwhile, the price of Bonny Light    yesterday rose   to $98 per barrel from $95   in the global market, following the collapse of talks between the United States and Iran over the weekend.

Crude oil prices had dropped to $90 per barrel from $100 last week, as market watchers anticipated that the talks would culminate in an agreement in Islamabad, Pakistan’s capital.

However, in an interview with Vanguard Energy, the Chief Executive Officer of Petroleumprice.ng, Olatide Jeremiah, said: “From all indications, the price of crude will continue to rise in the coming weeks because of tensions, speculation, and uncertainties in the market. The market will be driven by heightened conflict and instability.

“The impact will not be limited to the upstream segment; it will spill over into the downstream, leading to higher prices of petroleum products, especially Premium Motor Spirit (PMS), also known as petrol. Such increases will also affect transportation costs, as well as the prices of goods and services.”

Similarly, the National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), Mazi Colman Obasi, said: “The expected surge in energy costs will impact our domestic economy, but it may not be as severe as it could have been due to the operations of the 650,000 barrels-per-day Dangote Petroleum Refinery.”

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