According to data from Oil Price, Brent crude oil was priced at $91 per barrel. In recent weeks, Brent crude has seen a steady increase, reaching a 10-month high of $90 per barrel precisely one week ago.
This surge in prices is the highest recorded since 2014, and it can be attributed to Saudi Arabia’s announcement that it will maintain its voluntary production cuts of one million barrels per day until the end of 2023.
Additionally, Russia has declared its intention to extend its export cuts of 300,000 barrels per day for the same duration.
Furthermore, in a recent report, it was noted that traders are closely monitoring the release of the August United States consumer price index data scheduled for Wednesday.
This data release has the potential to significantly influence the direction of interest rates in the world’s largest economy, which is also the largest consumer of oil. A markets analyst at CMC, Tina Teng, emphasised the importance of this data release in shaping future economic and oil market trends.
The Chief OPEC Correspondent, Amena Bakr said although Brent crude is trading above $90 per barrel, producer nations are not targeting $100 per barrel because it would only slow down oil demand.
Birol pointed out that despite the recurring discussions regarding the concept of reaching peak oil and peak coal in past years, both of these energy sources are currently experiencing record-high levels of production. This trend contradicts any suggestions that these energy resources might be on the verge of decline in the near future.
An uptick in the price of Brent crude oil coinciding with the period when marketers are procuring and importing petroleum products into the country would result in a further escalation of fuel prices for Nigerian consumers.
Should this surge in oil prices persist during the importation phase, it would translate into higher costs for petroleum products borne by Nigerians.
It is essential to recognise that crude oil is a globally traded commodity, and its fluctuations invariably influence prices at the fuel pump.
Given the ongoing supply constraints stemming from Saudi Arabia and Russia, the dynamics of local fuel prices are bound to react accordingly.
This was underscored in July 2023 by the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL) in the wake of deregulation (fuel subsidy removal).
In this scenario, fuel prices are subject to market forces, meaning they can either rise or fall based on prevailing market conditions.