…as Russia Plans To Cut Oil Output By 500,000 Bpd
Nigerians should brace up for higher prices for fuels as Russia promised weekend that it will reduce its supply of crude oil to the international market by 500,000 barrels per day.
Nigeria was a major importer of fuel or petrol at a highly subsidized rate and at a great cost to the economy. The government, however, decided to remove the fuel subsidy last month.
This Russian figure is different from what it earlier commitments of voluntary production cost. it then means that the market will be tight as supply will be reduced.
This would mean higher prices for crude oil and also higher prices for refined products which Nigeria imports heavily to meet t her domestic consumption.
With the exchange rate on the high side, it would mean that the price of petrol, diesel, and other products which are already too high for Nigerians to purchase will even go further higher, thereby increasing the price of domestic fuel sales.
The prices of crude oil at the weekend were Brent $78.04 per barrel and WTI at $73.40. Currently, $1 exchanges for about N760 or even higher.
President Bola Ahmed Tinubu recently removed the subsidy on premium Motor Spirit or petrol and the price went to as high as N550 per litre according to the NNPCL template.
With the latest move by Russia, the price would go much higher than N550 per llitre. The Nigeria National Petroleum Company Limited (NNPCL) will however not be the only one that will be importing fuel to the country anymore as licenses have been given to other companies that will source their foreign exchange from different sources and not from government official sources like NNPCL, they would therefore sell their products at the market price which is going to be higher than perhaps what the NNPCL would sell its own.
Russia will reduce the amount of oil it ships to the market by half a million barrels per day, the Russian energy ministry said on Friday—this is in addition to the earlier assumed commitments of its voluntary production cut.
“Russia confirms it will reduce supplies to oil markets by 500,000 barrels per day in August through lowering of exports. It means taking all the requisite measures to achieve this goal within the framework of the voluntary reduction. This reduction complements the voluntary decrease Russia announced earlier and which was extended until the end of December 2024,” the Energy Ministry said in a statement on Friday, according to TASS.
Russian Deputy Prime Minister Alexander Novak said earlier that Russia had voluntarily agreed to cut oil supplies to the market by half a million barrels per day in August by cutting exports.
“As part of the efforts to ensure a balanced market, Russia will voluntarily reduce its oil supply in August by 500,000 barrels per day by cutting its exports to global markets by that quantity,” Russia’s Deputy Prime Minister and top OPEC negotiator Alexander Novak said earlier this week, adding that the cut in exports would lead to a cut in production.
The export cuts come as Brent crude oil prices climb over $78 per barrel. The price of Russian ESPO crude, which goes to China, rose to the highest in seven months earlier this week as Chinese buyers rushed to buy it ahead of an announced 500,000-bpd cut in exports next month. Earlier this week, ESPO was trading at a $4 per barrel discount to Brent crude, or $6 per barrel above the G7 price cap—and that was before today’s $2 Brent price increase.
By Olusola Bello with agency report