Oil price surges to $83 per barrel amid global supply concerns

Global oil prices have experienced a significant surge, with Brent crude, the international benchmark, climbing 0.75 percent to per barrel.

The US West Texas Intermediate also rose by 0.86 percent, settling at $79 per barrel. This surge in oil prices is primarily attributed to the anticipated tightening of global supply. The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, have implemented production cuts to limit supply. Moreover, involuntary outages in some regions have further contributed to supply concerns.

The price hike occurred just before the scheduled meeting of key OPEC+ ministers, set to take place on August 4. During this meeting, the ministers will assess the current state of the oil market.

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Rising crude prices have also had repercussions on petrol prices in Nigeria, which uses Brent crude as its oil benchmark. The international spot price of petrol, a major determinant of petrol prices in Nigeria’s post-subsidy regime, has been inadvertently influenced.

Last week, Nigeria witnessed a significant increase in petrol prices, surging from N540 to N617 per liter. Farouk Ahmed, the chief executive officer (CEO) of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), explained that the rising crude prices directly influenced this price hike.

Ahmed stated, “A week or so ago, the price of crude was hovering around $70 per barrel. Now, it’s over $80 per barrel. So, of course, the crude prices also drive the product price.”

Importers responsible for importing petrol into Nigeria consider various factors such as the cost of importation, freight charges, and other elements related to local distribution while determining the final product price. The increase in global crude prices has inevitably contributed to the higher petrol costs in the country.

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