Crude oil price yesterday continued its upswing as Brent, Nigeria’s benchmark crude, rose above $113 per barrel for the first time in close to eight years.
This was as the Organisation of Petroleum Exporting Countries (OPEC) resolved to continue the addition of a measured volume of 400,000 barrels per day, agreed with its allies, OPEC+, in August last year.
The producers’ group, which decided on the quota for member countries for April, allocated Nigeria with 1.735 million barrels per day as its production for next month.
But it remains doubtful whether Nigeria would be able to meet its allocation for the month, having consistently, for close to a year, been unable to supply the global market with its required volume.
Last month alone, the country recorded a deficit of over 300,000 barrels per day, even though the total quantity of oil it drilled for that month, roughly 1.4 million bpd, was its best in several months.
The increasing crude oil price also implies that the controversial subsidy payments in the country would rise when the computation for this month is done, since the pump price of petrol in Nigeria, which does not refine a drop of the product, has a positive relationship with the international crude oil prices.
Although by now, Nigeria should be saving as much as $50 per barrel that it sells, the reverse appears to be the case, as the cost of under-recovery continues to soar.
In January 2022 alone, the Nigerian National Petroleum Company (NNPC) Limited claimed that it expended N210.38 billion on petrol subsidy.
Furthermore, due to the challenge, last month, the oil company failed to remit any money to the federation account, a development that would definitely hamper the ability of sub-nationals to meet their financial obligations.
President Muhammadu Buhari recently asked the National Assembly to approve the N2.557 trillion budget for petrol subsidy in 2022.
However, aside Brent, which exceeded $113 per barrel, recording over 7.69 per cent hike at the time of writing this report, West Texas Intermediate (WTI), the United States benchmark, also surged to $111.24 per barrel, with about 7.57 per cent increase.