Crude Oil Bounces Above $105, Headed For $110

London Brent crude futures rose as much as 8% to above $105 per barrel on Thursday after falling for three straight sessions. The price responded to failed peace talks between Russia and Ukraine and the IEA warnings of a drop in production from Russia and what it could portend from price generally.

According to trading economics, US crude is on track for a second straight week of losses and is still more than 20% below a record high of $139.1 set on March 7th, owing to a surprise increase in US crude inventories, signs of progress in Russia-Ukraine peace talks, and concerns about slowing Chinese demand due to COVID-induced lockdowns.

To combat a return of omicron infections, Chinese authorities are sticking to their Covid Zero policy of "Find, Trace, Isolate, and Support," with mobility restrictions implemented in Shanghai, Shenzhen, Jilin, and Langfang.

EIA data shows that US crude stockpiles rose by 4.3 million barrels last week, despite predictions that they would fall by 1.4 million barrels.

Brent crude oil previously achieved an all-time high of 147.50 in July of 2008. Brent crude oil statistics, projections, and historical charts were last updated in March 2022.

A sustained rise in crude oil prices as a result of the aforementioned factors might have disastrous consequences for the Nigerian people.

Already, the price of diesel (AGO) has reached an all-time high of N750/litre, making it impossible for my companies that rely on the product to remain open.

Just last week, the Manufacturers Association of Nigeria (MAN), the umbrella organization that represents Nigerian manufacturers, issued a warning about the threat of numerous firms closing due to this painful surge.

Another anticipated consequence is an increase in transportation costs as a result of increases in PMS and AGO prices.

Transport operators in Lagos and other major cities have begun to make minor to moderate changes to transportation rates.

The growing price of crude oil will have an impact on the cost of essential food goods. This is due to the fact that carriers who are in charge of carrying these food goods from farmlands in the far north of the nation would have to adjust upwards to account for fluctuations in diesel prices.

Despite the federal government's pledges that fuel prices will remain stable, data from around the country demonstrates that there is no uniformity in fuel pricing since individual petrol stations sell at prices that reflect their unique expenses and profit margins.

A lot of this could have been avoided if our major refineries and modular refineries had been running.

So the only thing we can hope for is that the Dangote oil refinery begins operations ahead of schedule.