Nigeria records extra revenue as oil trades close to $92 per barrel

Nigeria recorded extra revenue of $13.71 per barrel as crude oil traded at $91.67, $14 higher than the 2024 budget benchmark which was based on $77.96 per barrel and 1.78 million barrels per day.

Nigeria Brass River and Qua Iboe traded close to $92 a barrel while Brent Crude at the time of writing traded at $89 per barrel. Nigeria Bonny Light also traded at $91.37 a barrel.

Although efforts to combat oil theft have intensified, Africa’s largest economy needs to be able to fulfil its budgetary targets of 1.78 million barrels per day.

Additionally, with numerous refineries set to come online this year, worries regarding the supply of feedstock for the refineries have grown over the past month.

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After a drone strike by Ukraine on a second Russian refinery raised the possibility of shutting down even more of the nation’s processing capacity and reducing the production of gasoline and diesel fuel, prices shot up. Russia is one of the biggest and one of the top three producers of oil in the world.

Investors are also worried that, having sworn payback, Iran’s retaliation against Israel for an attack on Monday that claimed the lives of high-ranking military officers may cause supply interruptions in the vital Middle East-producing region.

Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), supporting the Hamas militia in Gaza against Israel.

Concerns over supplies were increased by the fact that according to an internal memo seen by Reuters, Mexico’s state energy corporation Pemex asked its trading section to halt up to 436,000 barrels of crude exports per day this month as it prepared to process domestic oil at the new Dos Bocas refinery.

The United States is the largest oil consumer in the world, and early signs point to a decline in oil stockpiles there as well.

On Tuesday, traders reported that data from the American Petroleum Institute showed that last week’s crude inventories had dropped by 2.3 million barrels.

Nigerian oil, however, confronts fierce competition from American suppliers even though it sells at a premium who have pushed their way into the market previously controlled by Nigeria and other Organization of the Petroleum Exporting Countries (OPEC).

In addition, US oil production is rising while OPEC and Russia have declined.

This change is most noticeable in India, a significant consumer of Nigerian crude oil, where Indian refiners are refusing to accept cargoes from tankers owned by the sanctioned Russian company Sovcomflot PJSC, leading to a move away from sanctioned Russian oil and toward US crude.