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Oil Prices Surge Amid Extended Output Cuts; Experts Predict Potential Rise to $107

By Grace Chigbu In a significant market shift over the weekend, Nigeria’s Bonny Light crude oil price experienced a jump, climbing to $92.79 per barrel from the $90.88 per barrel reported last Tuesday. The driving factor behind this sharp rise is the continuation of output cuts by major oil producers. Russia announced its decision to extend its voluntary crude oil export cut by 300,000 barrels daily until December 2023. In a similar move, Saudi Arabia will carry on with its 1 million daily supply cut until October 2023, a strategy primarily aimed at enhancing price stability. This year, the price of Nigeria’s Bonny Light reached its zenith, registering an excess of $17.79 per barrel when compared to the 2023 budget benchmark price of $75. Goldman Sachs Commodities Research weighed in on the matter this Saturday, forecasting that the ongoing oil supply cuts might propel oil prices to an astounding $107 per barrel by 2024. Prof. Omowumi Iledare, a respected sector analyst and the Executive Director of Emmanuel Egbogah Foundation, in a conversation with Financial Vanguard, projected a further rise in oil prices. He emphasized that oil inventories in the U.S. have witnessed a drastic reduction, leading to heightened prices. “Rising crude price is foreseeable,” he said, “though it may not immediately hit the $100 per barrel mark.” He attributed the steady climb to the escalating demand, declining supply due to geopolitics, and dwindling reserves in the U.S. In a separate discourse with Financial Vanguard, Prof. Felix Amieyeofori of EnergyHub Nigeria, mirrored Iledare’s sentiments. Highlighting the increased global investments in renewables over oil, he said, “With the world turning towards a cleaner environment and oil witnessing reduced investments and production, prices are bound to soar.” Amieyeofori also cautioned consumers, predicting a surge in petrol prices due to refiners needing to offset the increased cost of crude oil. Recent data from OPEC has spotlighted Nigeria as its member with the lowest refining capability, averaging 10,600 barrels per day over the last five years. OPEC’s Annual Statistical Bulletin 2023 revealed the nation’s refining history, showcasing amounts of 33,000 bpd, 8,000 bpd, 1,000 bpd, 5,000 bpd, and 6,000 bpd for the years 2018 through 2022. In stark contrast, Saudi Arabia held its position as OPEC’s top refiner, averaging 2.6 million barrels daily during the same period. Saudi Arabia’s impressive refining records showed figures of 2.8 mb/d, 2.6 mb/d, 2.3 mb/d, 2.5 mb/d, and 2.9 mb/d for the respective years from 2018 to 2022. Amidst these developments, Financial Vanguard’s investigations revealed that uncertainty in the market led many major and independent marketers to retreat from fuel importation. However, fuel lifting persisted in Ijegun and Satellite Town depots in Lagos, even though a noticeable number of filling stations closed their doors to motorists and other consumers.

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