The brent crude oil, against which Nigerian oil is priced, hit $85.16 per barrel on Wednesday, 12th January. This sharp increase has been attributed to the highly contagious Omicron variant and its impact on fuel demand across the world.
Senior Market Analyst, Asia Pacific at OANDA, Jeffrey Halley, said in a note that Brent could move towards $100 per barrel this quarter.
“Assuming China doesn’t suffer a sharp slowdown, that omicron actually becomes omi-gone, and with OPEC+’s ability to raise production clearly limited, I see no reason why Brent crude cannot move towards $100.00 in Q1, possibly sooner.” he said. Likewise some financial institutions added that they also expect oil prices to “overshoot” to $125 a barrel this year, and $150 in 2023.
While Nigeria might potentially earn more foreign exchange with this price increase, there is also the issue of paying more for fuel subsidy.