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  • Oil & Gas - News
  • Updated: February 17, 2022

Geopolitical Tension Between Ukraine, Russia Drives WTI Crude Lower To $90.8

Geopolitical Tension Between Ukraine, Russia Drives WTI Crud

WTI crude futures declined more than 2% today to below $91.5 a barrel, according to tradingeconomics.com.

This outcome was a result of renewed geopolitical tension between Ukraine and Russia which is causing major disruptions in supply from Russia.

The price also reacted to planned crude oil supplies coming from Iran. Analysts believe that a possible supply excess will drive the price much lower.

Accordingly, Iran is close to accepting a deal on its nuclear programme, which could mean the release of about 1.3 million barrels a day of crude supply, helping to ease a tight global market.

Reports from several media sources revealed that the tensions between Russia and the West over Ukraine could escalate much worse after Russian-backed rebels accused Ukrainian forces of shelling their territory.

On Wednesday, NATO said that Russia was putting more troops on the border with Ukraine. Moscow denied the accusation by saying that it had started getting rid of some of its military units.

Analysts at trading economics, expect WTI crude to trade at $89.33/BBL by of the first quarter.

Implications for Nigeria

  • We expect more price pressure on the retail price for PMS, AGO, and PMK. Despite the slight decline, any physical confrontation between the West and Russia over Ukraine could affect the supply chain thereby pushing the price much further.
  • If Iran starts production, the oversupply could drive the global price of crude downwards. This will affect the revenue projection from crude oil sales of the federal government.
  • On the other hand, if the price drops because of overproduction, there could be less pressure on the government to remove fuel subsidies thereby giving its citizens some price respite.
  • The drop in price could also reduce minimally the pressure on the government to intervene in the FX market.  

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