Two OPEC members could soon determine whether oil prices spike back towards $100 a barrel — and those countries are not Saudi Arabia and Iran.
With U.S. sanctions choking off Iran’s exports and Saudi Arabia hiking output to fill the gap, it’s crucial for other major producers to keep crude flowing in the coming months. That’s why many analysts are paying close attention to Nigeria and Libya, two nations heading into high stakes elections and where output has swung wildly in recent years.
The situation in the two countries could play a “big role” in determining the price of oil — which is trading near four-year highs — according to RBC Capital Markets. RBC has warned clients that 500,000 barrels per day could be periodically lost from the two nations, and elections may bring additional unrest.
Investment bank Barclays does not think oil prices will hit triple digits, but the outcome of Nigeria’s elections in February presents the biggest risk to that outlook, Michael Cohen, the bank’s head of energy markets research, said in a recent note to clients. A change of leadership threatens to unsettle the current government’s arrangement with militants who wreaked havoc on the country’s oil output two years ago.
If Nigeria’s political opposition unseats President Muhammadu Buhari, Barclays analysts believe the new leadership will probably have to renegotiate a deal with militants brokered by Buhari’s government. During a political transition, militants might resume attacks on oil infrastructure, which caused Nigeria’s output to plunge by about 400,000 bpd in early 2016.
Source: Hellenic Shipping News