Crude oil price has hit 7-Year High as both Benchmarks trade above $90.
The international crude oil price surpassed $90 per barrel on Wednesday, costing Nigeria over N14.9 billion per day.
According to Reuters data, Brent, the crude oil benchmark for Nigerian oil, closed at $90.20 per barrel on Wednesday, triggered by potential sanctions against Russia over the Ukraine invasion.
It’s also expected to be a catalyst for higher crude prices in the coming days, possibly approaching $100.
The rise in oil prices represents a huge missed opportunity for Nigeria, which has the tenth best oil reserves in the world but is still struggling to meet monthly oil production cuts.
According to Nigeria’s Petroleum Minister, Timipre Sylva, Nigeria’s OPEC+ quota production quota, which covers only crude oil and not condensates, is set at 1.614 million barrels per day, while the country’s production capacity is closer to 2.2 million barrels per day.
Nigeria’s production in December 2021 was only 1.2 million barrels per day, falling 400,000 barrels per day short of the OPEC+ quota allowance.
The 400,000-per-day production shortfall could have earned Nigeria over $36 million per day, or N14.9 billion at the current exchange rate of N416/$, based on a daily wage of $90.
In fact, if the money put on the table by NNPC is realized, Nigeria will easily be able to cover the N270 billion in monthly subsidies that are expected to be paid.
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On Wednesday, the NNPC presented the Federal Executive Council (FEC) with a bill for N3 trillion in subsidy payments for the months of July to December in 2022.
The FEC, which met at President Muhammadu Buhari’s presidential villa in Abuja and was presided over by him, considered the request and stated that it would write to the National Assembly soon.