Oil prices continued to surge as Brent crude, global oil benchmark, climbed a three-year high amid increasing demand for the commodity.
At 11.25 am Tuesday, Brent crude climbed 0.86 percent to $80.22 a barrel — the highest since October 2018.
U.S. West Texas Intermediate (WTI) crude futures also witnessed a corresponding increase of 1.05 percent to $76.24 a barrel.
On Monday, Goldman Sachs raised its year-end forecast for Brent to $90 per barrel from $80.
Analysts said the surge in natural gas prices supported crude rally on expectations that spillover demand will benefit oil as users seek alternatives.
“Oil demand could pick up by an additional 0.5 million barrels per day, or 0.5 per cent of global oil supply, as high gas prices force a switch from gas to oil consumption,” Vivek Dhar, Commonwealth Bank commodities analyst, told Reuters.
The rise in crude oil price may mean more revenue for Nigeria but the country’s subsidy shortfall payments may erode the opportunity.
Nigeria, one of Africa’s top producers, is struggling to boost output to the quota set by the Organisation of Petroleum Exporting Countries (OPEC) to keep up with increasing global demand.
Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), had said that Nigeria’s underperformance in the last few months concerning the quota allocated by OPEC would be halted by the end of October this year or mid-November.
“From everything we’re doing, we’ll get back to the OPEC level, probably, by the end of October and maximum middle of November. We’re not far from that,” he had said.
In August, Nigeria’s oil production dropped to an average of 1.23 million barrels per day, the lowest figure recorded yet in 2021, according to data from the Department of Petroleum Resources (DPR).
