There are more troubles ahead for Nigerians as the price of Petrol may be close to N1000 per litre if Russia joins Saudi Arabia by reducing the exports of crude oil by 500,000 barrels daily starting from August.
The two major determinants of the price of petrol are the prices of crude oil which was $81 at the weekend and the Exchange rate which was also put at $1to N776.3537. These determinants may keep increasing or fluctuating in the international markets. Nigeria has no control over them.
With the threat of Russia reducing crude oil exports by 500,000 barrels per day at the international market, this may shrink the volume of crude oil and therefore push up the price of the commodity. As per the foreign exchange, Nigeria does not have enough to go round, so the cost of getting it is high.
Even though Suhail al-Mazrouei, the energy minister of the United Arab Emirates (UAE stated that OPEC+ alliance would do “whatever necessary” to support the oil market, after Saudi Arabia and Russia announced cuts to production and exports, respectively, for next month, this might not be a good sign for Nigerians at this material time when subsidy has just been removed and as the price of petrol has been subjected to the forces of demand and supply
The price of petrol in Nigeria was last Tuesday moved to over N600 per litre, and this has created uproar across the country.
According to Suhail al-Mazrouei, the current moves of OPEC+ to cut oil production are enough to support the market, he told Reuters on Friday.
The actions the OPEC+ group has taken so far are sufficient, according to the OPEC heavyweight the UAE.
“What we are doing is sufficient as we say today,” al-Mazrouei told Reuters.
“But we are constantly meeting and if there is a requirement to do anything else then during those meetings, we will pick it up. We are always a phone call away from each other,” the minister added.
At the OPEC International Seminar in Vienna early this month, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said that the
Saudi Arabia, the world’s top crude oil exporter, said it would extend its unilateral oil production cut of 1 million bpd into August. Saudi Arabia will be producing around 9 million bpd in both July and August after extending the voluntary cut.
Russia’s Deputy Prime Minister Alexander Novak said that Russia would reduce its crude oil exports by 500,000 bpd in August in a bid to ensure a balanced market.
Russian crude oil exports have shown signs of declines for a second consecutive week and are estimated to have sunk to a six month low in the four weeks to July 16.
As Russia is preparing to cut 500,000 bpd off its oil exports in August, shipping plans so far suggest that Russia could deliver at least part of its pledge to reduce oil exports next month.
Saudi Arabia’s crude oil exports have also started to decline, to below 7 million barrels per day in May for the first time in many months.
Olusola Bello with additional report from Oilprice.com
