Oil Price Increase: Petrol May Sell For N750 As Crude Oil Price Surges To $85 Per Barrel

There are indications that the pump price of Premium Motor Spirit, (PMS) popularly known as petrol may exceed N750 per litre anytime from now owing to rising price of crude oil at the international market. Currently, petrol sells for between N540 and N700 per litre in some areas in Nigeria as the country’s Bonny Light crude oil rose above $85 per barrel in the international market on Friday.

Also, the price of Brent Crude oil rose to $84 per barrel, while West Texas Intermediate (WTI) crude rose to $79.91 per barrel. Brent crude, which influences the prices at Light crude is traded, be- gan rising from Monday, July 17 when it was $78.5 per barrel to $83.25/b on Tuesday, July 25 and $84.03/b yesterday.

The price of Bonny light also rose to $85 per barrel yesterday from former prices earlier in the year. The price of Bonny Light fluctuated from $74.35 to $73.87 per barrel in March 2023. However, yesterday’s price of $73.87 is still lower than the price of $117.58 recorded on July 31, 2022.

The implication will upwardly affect the price at which importers import the commodity thus spik- ing the pump price since some private companies have been licensed to im- port it. The rise would also yield more money to Nigeria owing to the fact that the crude oil benchmark in 2023 budget is $75 per barrel.

Nigeria is therefore earning more money than its 2023 benchmark with the current price of Bonny Light crude at above $85 per barrel. Goldman Sachs, an investment bank, had predicted that oil prices would increase as a result of record-high oil demand and lower supply, which will create a large market deficit.

According to it, the price would rise to $86 per barrel by year-end. It had predicted that the crude oil production cuts by the Organisation of Petroleum Exporting Countries (OPEC) could lead to a significantly larger deficit in the market, thereby driving a price rally to $100 per barrel by April 2024.

The movement of price from below $70/b for the whole of the month and now making some recovery is also connected to the decision of OPEC+ members to an additional 1.6 million barrels per day of voluntary cuts at the start of April.

Also, the International Energy Agency (IEA) had predicted that a tightening supply-demand would increase the price as high as $100 per barrel. According to it, global oil demand will eclipse supply by almost 2 mb/d in the second half of 2023, which will shoot prices to around $100 per barrel.

Meanwhile, oil prices are set for yet another weekly gain despite a slight dip from Thursday’s close, according to Oilprice.com. It reported that Brent crude, which topped $84 per barrel on Friday, and West Texas Intermediate, which touched $80 per barrel, are both on course for a weekly gain of nearly 4%.

The Federal Reserve had this week announced yet another rate hike of 25 basis points, which should have been bearish for oil. Yet Bloomberg noted in a report from Thursday that there are expectations the Federal Reserve is going to wrap up its rate-hiking program soon, which, in turn, is viewed as bullish for crude.

Then there is the OPEC+ production cut and specifically Saudi Arabia’s cut of 1 million bpd in production. Initially brushed off by a market too busy worrying about economic indicators, now the cut is drawing traders’ attention as demand for crude remains robust. which Nigeria’s Bonny