Alex Omenye
Nigerian crude oil prices edged closer to the $90 per barrel threshold amid escalating tensions in the Middle East and hints of a potential rate-cut cycle in September.
Pricing slightly above $88 a barrel, Nigeria’s Brass River, Bonny Light, and Qua Iboe grades commanded significant premiums over the current Brent contract.
Early on Monday, U.S. West Texas Intermediate prices rose by 52 basis points to approximately $80.5 per barrel, while Brent prices climbed more than 50 basis points to about $83 per barrel.
The Israeli military launched airstrikes against Houthi rebels in Yemen, backed by Iran, using fighter jets. This followed a Friday incident where rebels used a kamikaze drone to breach Tel Aviv airspace, resulting in one fatality.
Statements from Houthi official Mohammed Abdulsalam condemning “brutal Israeli aggression against Yemen” contributed to heightened oil prices. He cited airstrikes on the Yemeni port of Hodeida, fuel storage facilities, and a power plant, allegedly aimed at pressuring Yemen to halt support for Palestinians in Gaza.
Israeli airstrikes were retaliatory for the Houthi drone attack, which caused one death and eight injuries in Tel Aviv on Friday, raising concerns of broader conflict involving Yemen’s Houthis, Hezbollah, and Israel.
Meanwhile, the Federal Open Market Committee (FOMC) meeting on interest rates scheduled for July 30-31 may maintain rates, but markets watch for signs of potential cuts later in the year.
U.S. President Joe Biden withdrew his re-election bid, endorsing Vice President Kamala Harris for the Democratic Party nomination against Republican Donald Trump in November.
China’s slower-than-expected second-quarter GDP growth of 4.7% also weighed on fossil fuel markets, prompting speculation about its impact on global oil consumption despite China’s policy statements aiming to boost advanced industries and business climate.
Nigeria’s oil production remains below OPEC’s quota due to persistent oil theft, complicating efforts to meet the Federal Government’s budget baseline of 1.78 million barrels per day (including condensates) and OPEC’s limit of 1.5 million barrels per day for 2024.
The Nigerian Upstream Petroleum Regulatory Commission reported declining production levels for condensates and crude oil from January to March, with June’s output reaching 1.27 million barrels per day, according to OPEC’s Monthly Oil Market Report.
The country’s budgetary projections have been disrupted by low production, highlighting the economic significance of oil and gas revenues, which constitute 80% of foreign exchange earnings and 70% of budget revenue.
NNPCL’s Group Chief Executive Officer, Mele Kyari, acknowledged pipeline vandalism and oil theft as national issues, with the President directing efforts to curb these activities and restore production to expected levels.
