NIGERIA has received an unexpected economic boost after global crude oil prices soared to over $65 a barrel and could rise to as high as $80 after two attacks on Saudi Arabian facilities over the weekend took out about 5% of world supply.
Two drone attacks on the Saudi oilfields, which the US blames on Iran, has sparked fears of increased risk to energy supplies across the region. Brent crude, the international benchmark used by oil traders and identical to Nigeria’s Bonny Light Crude, jumped to $71.95 a barrel at one point by settled at $65.76 this morning.
US oil prices also spiked but they also dropped as President Donald Trump authorised the release of US reserves. Prices remain below Brent’s 12-month high of $86.29 a barrel seen last October but there are fears that if the outage lasts for more than six weeks, they could hit $75 a barrel.
Saturday’s drone attacks on plants in the heartland of Saudi Arabia’s oil industry hit the world’s biggest petroleum-processing facility as well as a nearby oil field, both of which are operated by energy giant Aramco. Together they account for about 50% of Saudi Arabia’s oil output, or 5% of daily global oil production and it could take weeks before the facilities are fully back on line.
Bob McNally, president of Rapidan Energy Group and a former energy adviser to President George, said: “I think it’s going to last. As long as the United States and Saudi Arabia on one hand and Iran on the other remain in this escalatory conflict then we’re going to build in a risk premium because it’s getting very serious.”
US secretary of State Mike Pompeo claimed that Tehran was behind the attacks but Iran accused the US of deceit. Saudi Arabia has provided little details about the attacks, apart from saying there were no casualties but has given a few more indications about oil production.
Energy minister Prince Abdulaziz bin Salman said some of the fall in production would be made up by tapping huge storage facilities. Saudi stocks stood at 188m barrels in June, according to official data and the kingdom is the world’s biggest oil exporter, shipping more than 7m barrels daily.