The outlook of Nigeria’s economic outlook brightened on Monday after Brent crude oil closed near $87 per barrel amid geopolitical tensions and tight supply.
Yesterday, prices soared as Russia’s war on Ukraine increasingly focused on attacks on energy installations and the United Nations authoritatively called for a ceasefire in the Israel-Gaza conflict.
Business Post reports that Brent appreciated by $1.32 or 1.55 per cent to trade at $86.75 per barrel, and the US West Texas Intermediate (WTI) crude rose by $1.32 or 1.64 per cent to trade at $81.95 per barrel.
The two crude grades settled higher on Monday as orders from the Russian government to curb oil output and attacks on energy infrastructure in both Russia and Ukraine offset the United Nation’s demand for a ceasefire in Gaza.
A Ukrainian drone attack over the weekend has reduced capacity of a Russian oil refinery to around half. Kyiv struck Russia’s Kuibyshev oil refinery in Samara, taking out one refining unit and reducing capacity by half.
So far, Ukraine has attacked seven Russian refineries, taking nearly 400,000 barrels per day of capacity offline.
Russia, in turn, attacked an underground natural gas storage site in Ukraine and even though supplies have not been disrupted, it has forced the largest energy producer in the country to run at 50 per cent capacity. This has led to the suspension of electricity exports.
Meanwhile, Russia has ordered companies to reduce oil output in the second quarter to meet a production target of 9 million barrels per day by the end of June, in line with its pledges to the Organisation of the Petroleum Exportng Countries and its allies, OPEC+.
Elsewhere, the United Nations Security Council adopted a resolution on Monday demanding an immediate ceasefire between Israel and Palestinian militants Hamas and the release of all hostages after the United States abstained from the vote.
Market analysts say the market will be looking to see how the UN resolution on a ceasefire actually plays out on the ground in Gaza, and whether that would ultimately result in the Houthis stopping their attacks on tanker traffic in the Red Sea.
Yemen-based Houthi rebels have been ramping up attacks on ships traversing the Red Sea in support of Palestinians in Gaza and a ceasefire could help relieve supply bottlenecks if the attacks ease by allowing vessels to use the Suez Canal rather than taking longer, more costly diversions around the horn of Africa.
Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.
Modupe Gbadeyanka