For the first time since 2014, Brent oil prices has moved past $100 a barrel, as Russia-Ukraine crises continue to escalate.
These tensions subsequently sparked fears of disruption to the region’s critical energy exports.
Russia is a major energy supplier to a number of countries, distributing about ¼ of Europe’s oil requirements and 1/3 of Europe’s gas requirement.
The Russia-Ukraine crisis, which was escalated by Russia’s decision to move peacekeeping forces to protect the Donbas region.
This escalation raised concerns in a market that was already under stress, with global oil demand far exceeding supply just as the global economy recovers from the pandemic.
The OPEC+ faction, led by Saudi Arabia, seeks to restore production capacity as quickly as possible, and this is causing some of the biggest players in the market to be wary of an increasingly tight market.
According to JPMorgan Chase & Co., oil prices will likely rise to an average of $110 this week.
Reportedly, the market could see sustained price increase in the coming quarter, then a retreat to an average of $90 before year end.
what you should know#
Russia accounts for one in every 10 barrels of oil consumed globally, so it is a major player when it comes to the price of oil.
If Russia invades Ukraine, and the US government sanctions Russia’s oil export, it would reduce supply in the global oil market by roughly 11 million bpd, a development that should lead to an increase in oil price which would lead to an improvement in Nigeria’s economy.
Nigeria, Africa’s biggest oil-producing country relies on crude oil for most of its foreign exchange and two-third of government revenue.
Nigeria also needs the oil price to rise and in the worst case, remain steady at any price above its revised budget benchmark of $62 a barrel to feasibly implement its 2022 budget.
Since the start of February, already-rising oil prices have jumped more than 10% amid the tensions.