Oil prices yesterday maintained their upswing, hitting their highest in about 13 months on the back of vaccine rollouts expected to increase demand even as producers kept supply reined in.
Global benchmark, Brent Crude, was up 88 cents, or 1.4 per cent, at $63.31 a barrel after climbing to a significant high of $63.76, the highest since January 22, 2020.
Also, US West Texas Intermediate (WTI) crude futures gained $1.14, or two per cent, to $60.61 a barrel, touching $60.95, its highest since January 8 last year.
The upswing in oil prices came as the federal government yesterday unfolded plans to stop gas flaring in the next four years.
Oil prices have rallied over recent weeks as supplies tighten, due largely to production cuts from the Organisation of the Petroleum Exporting Countries (OPEC) and allied producers in the group OPEC+.
Russian Deputy Prime Minister Alexander Novak said the global oil market was on a recovery path and the oil price this year could average $45-$60 per barrel.
“We’ve seen low volatility in the past few months. This means the market is balanced and the prices we are seeing today are in line with the market situation,” Novak was quoted as saying.
Also, the fears of heightened tensions in the Middle East prompted fresh buying, while hopes that a United States stimulus and an easing of lockdowns will buoy fuel demand.
The Saudi-led coalition fighting in Yemen said late on Sunday it intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group toward the kingdom, state TV reported, raising fears of fresh Middle East tensions.
For the first time in about a year, Brent futures hit $60.04 a barrel on February 8, a development that was last experienced by the global oil market on February 20, 2020.
However, rising international oil prices have heightened tension in Nigeria amidst warnings from labour and other groups that the federal government, which has deregulated the downstream sector of the petroleum industry, should not hike the pump price of petrol.
On March 19, 2020, the federal government said it had adopted a price modulation system whereby pump price would be adjusted to reflect price movement in the international crude oil market.
Last week the Minister of State, Petroleum Resources, Chief Timipre Sylva, had asked Nigerians to prepare for the economic pains that could come with an increase in petrol price.
He had stated that the Nigerian National Petroleum Corporation (NNPC) could not continue to bear the cost of under-recovery or subsidy, adding that while government revenue had improved, prompted by the rise in crude oil price, it could not be frittered on subsidy payment.