KEY POINTS
- Nigeria and oil firms operating in the country have earned an estimated $4 billion windfall in 52 days as the US-Israel-Iran war pushed crude prices higher.
- Bonny Light’s average price during the war jumped from $70.14 to $116.84 per barrel, a 66.6 percent climb, according to Central Bank of Nigeria data.
- Bonny Light climbed to $98 a barrel after the collapse of US-Iran talks, with analysts warning of further upside and downstream pump-price pressure.
Nigeria and the oil firms working its fields have pocketed an estimated $4 billion windfall over the seven weeks of the US-Israel-Iran war, as crude prices surged on a wave of Middle East risk.
The war broke out on Feb. 28 and has now run 52 days. Across those 52 days, the average price of Nigeria’s Bonny Light crude jumped to $116.84 a barrel, up from a year-to-date average of $70.14 before the conflict, a 66.6 percent climb, according to Vanguard analysis of Central Bank of Nigeria data.
Bonny Light leaps past $116
Output also moved in Nigeria’s favor. Production rose to 1.546 million barrels per day in March from 1.483 million in February, according to the Nigerian Upstream Petroleum Regulatory Commission, giving the country more crude to sell at the higher prices.
Run the math at the pre-war Bonny Light average and Nigeria’s 52-day output yields about $5.64 billion in oil revenue. Run it at the post-war average and the same volume yields roughly $9.393 billion. The gap, about $4 billion, is the windfall flowing to the federal government and oil firms operating in the country.
The crude rally has not let up. Bonny Light climbed to $98 a barrel on Monday from $95, after talks between the United States and Iran collapsed over the weekend.
Prices had eased from $100 to $90 a barrel last week as traders bet on a deal in Islamabad, Pakistan. The market quickly reversed once the talks fell apart.
Pump prices feel the heat
Olatide Jeremiah, chief executive of Petroleumprice.ng, told Vanguard Energy that the upside is far from over.
“From all indications, the price of crude will continue to rise in the coming weeks because of tensions, speculation, and uncertainties in the market. The market will be driven by heightened conflict and instability. The impact will not be limited to the upstream segment; it will spill over into the downstream, leading to higher prices of petroleum products, especially Premium Motor Spirit (PMS), also known as petrol. Such increases will also affect transportation costs, as well as the prices of goods and services,” he said.
Mazi Colman Obasi, national president of the Oil and Gas Services Providers Association of Nigeria, said the squeeze on Nigerian wallets could have been worse without local refining capacity.
“The expected surge in energy costs will impact our domestic economy, but it may not be as severe as it could have been due to the operations of the 650,000 barrels-per-day Dangote Petroleum Refinery,” Obasi said.