Global oil prices rose moderately over the weekend as tensions between Saudi Arabia and Iran grew over the executions of a prominent Shia cleric (pictured above) and 47 others by the former. Saudi Arabia severed diplomatic ties with Iran on Sunday after its embassy in Tehran was attacked by protesters over the mass executions. Events in the middle east have now precipitated into an uncertainty in the energy markets giving oil prices a major boost after hitting multi-year lows in December.
Brent Crude rose to about $38.5 per barrel briefly crossing Nigeria’s budget benchmark of $38 before receding to about $38. Brent Crude lost 35% last year to close at $37.04 barrel and hit a year low of $35.98.
The escalation in Saudi will be closely watched by the Nigerian Government and posses both an opportunity and a problem. If tensions continue to escalate oil prices is expected to continue to rise giving the government more assurances over its budgeted revenues. On a flip side, the government may be cautiously anticipating a similar protest by Shiite Muslims in the North who had a recent confrontation with the Army a few weeks back.
Minister for State for Petroleum, Dr Ibe Kachikwu had said last year that he believes oil price will “probably average above the $45 a barrel price range,”.
