The global oil community appears to be in a celebratory mood as the threat of sanctions on Iran by the United States has spiked Brent crude to nearly $90 per barrel, the highest since 2014. The rise in oil price signifies increased revenue for oil producing countries but, regrettably, Nigeria may not benefit from this largesse.
Oil price has been on an upward swing since 2017, hitting $71 per barrel in January this year and currently hovering around $85 per barrel. Nigeria’s 2018 budget benchmark is put at $51 per barrel while production was put at 1.97 million barrels per day (bpd).
But, while countries with higher refining capacity may reap the gains of increased oil prices, same could not be said of Nigeria as the country is heavily dependent on imported petroleum products due to the poor state of the country’s refineries.
With such level of dependence of imported petroleum products, the gain that ought to have accrued to Nigeria is subsequently ploughed back into the payment of subsidies or what government has recently termed under recovery.
For Nigeria, a spike in oil prices would naturally translate to higher landing cost for refined products because once refiners buy crude oil at higher price, the cost of refining would equally rise, thereby eroding the gain for countries with low refining capacity.
Source: The Sun