Petrol landing cost may hit N400/litre , as Oil price edges towards $100 as geopolitics, capacity gap pressure mounts
Price of crude oil, especially Brent, jumped past $91 per barrel, yesterday, as tension between Russia and Ukraine and dwindling oil capacity pushed prices to record high.
Nigeria’s Bonny light, traded at $91.38 to barrel, now sells for about $29.38 higher than the projections of the 2023 budget.
Nigeria had approved a N17.126 trillion ($38 billion) budget for 2022 on an oil price benchmark of $62 per barrel and production of 1.88 million barrels per day.
Although the rising oil price should inspire good news, the continuous importation of refined petroleum products remains a challenge.
Earlier in January, when the price of crude oil hovered around $89 per barrel, the landing cost of petrol into the country was N384 forcing the Nigerian National Petroleum Corporation (NNPC) to send in a bill of N3 trillion as subsidy for the year.
With the price of crude oil already heading towards $100 per barrel, there are indications that the landing cost of petrol into the country may increase above N400 per litre.
Some analysts had linked the increasing cost of crude oil to the tensions around Ukraine, as there are indications that the weak outlook of OPEC’s spare capacity could continue to bring tension the market.
Recall that JP Morgan had predicted that Brent could rise to $125 per barrel as OPEC’s spare production capacity falls to 4 per cent of total capacity by the fourth quarter of 2022.
Earlier, the International Energy Agency had said OPEC spare capacity may fall by half to 2.6 million barrels per day before the end of June this year.
The development is also worsened by non-OPEC like the U.S that has been pumping less oil on the backdrop of the push away from fossil fuels.
Wall Street had also stated that Brent would reach $100 by the summer.
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