Oil Price Edges Up To $69pb After Slumping To Eight-week Low

Brent, Nigeria’s oil price benchmark steadied at $69.14 yesterday after a coronavirus-driven fall on Monday that saw prices tumble to an eight-week low of $68.62 per barrel.

The commodity’s upward trajectory was reversed with the latest virus waves demonstrating the uneven nature of the economic recovery, with the American Bank, Goldman Sachs, saying the delta variant may curb global oil demand by one million barrels a day for a couple of months.

But the fall from a multi-year high of $77 may not all be bad news for Nigeria, which recently expressed its discomfort over the rising price of the commodity, explaining that as a resource-dependent country, it’s not in its interest for prices to rise above its comfort zone.

Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, recently raised the alarm over the rising oil price, saying it was bad for nations like Nigeria since buyers of the country’s crude will either resort to buying less or start the search for alternatives. Kyari had put the oil price band with which Nigeria will be comfortable at between $50 to $60, even as Nigeria’s gains from increasing international prices of the product have also been wiped out by payment of petrol subsidy which recently hit N120 billion monthly.

Monday’s decline had also followed the agreement reached by the Organisation of the Petroleum Exporting Countries and allies (OPEC+) to increase oil production by 400,000 barrels per day starting from August 2021.

Although the OPEC+ deal was expected to see prices rise again to its pre-pandemic levels, the new strain could hit demand for oil.

Goldman Sachs said the OPEC+ deal to boost oil supply supports its view on oil prices and expects modest “upside” to its $80 per barrel summer Brent price forecast and a $5 upside to its $75 per barrel forecast in 2022.

Meanwhile, Royal Dutch Shell, yesterday confirmed that it will appeal a Dutch court ruling ordering the energy company to accelerate its carbon emission reduction target.

Shell had previously said it would appeal the May 26 ruling ordering it to reduce greenhouse gas emissions by 45 percent by 2030 from 2019 levels, significantly faster than its current plans.

The Anglo-Dutch company also said it would seek to ramp up its energy transition strategy in the wake of the ruling.

Shell Chief Executive, Ben van Beurden said in a statement yesterday that although the company had already put plans in place to cut its exposure to the fossil fuels industry, the court’s decision could upset its program towards the 2050 date.

“We agree urgent action is needed and we will accelerate our transition to net zero. But we will appeal because a court judgment, against a single company, is not effective. What is needed are clear, ambitious policies that will drive fundamental change across the whole energy system,” he said.