Crude oil prices soared high on Wednesday, trading at $73 per barrel in the aftermath of US President [Donald Trump’s] warnings to strike Russia’s ally Syria. This is followed by media reports that Saudi Arabia foiled a terror attack on its capital Riyad, an incident that equally contributed to the spike in prices.
This is the highest crude oil price recorded since 2014. Prior to this developments, global crude oil benchmark stood at $72.14 per barrel on Tuesday.
Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!
— Donald J. Trump (@realDonaldTrump) April 11, 2018
What is the relationship between President Trump’s warning and the spike in oil prices?
Trump’s Twitter statement left the global oil market in confusion, as stakeholders tried to decipher its full implications. Speculations were rife as to whether Trump’s military arsenal could actually be used against Syria. Much more worrisome was the question of whether Trump would also attack nearby Iran, Syria’s strong ally, and a significant global oil producer.
What does this development entail for Nigeria?
The rise in crude oil prices is advantageous to Nigeria in so many ways. Nigegn exchgn exchange reserves are forecast to hit $%0 billion before year end. A further rise in oil prices could cause this to happen sooner than later. The country’s foreign exchange rate has made considerable improvement.
Buoyant foreign reserves will also keep Foreign Portfolio Investors (FPI) within the country. Foreign investors are key players in any economy, and especially so for a developing country like Nigeria. Therefore, as long as crude oil prices and the poltiical economy remain favourable, FPI inflows will be maintained.
Nigeria’s economy is solely dependent on crude oil; its mainstay. Therefore, increase in crude prices presents immense advantages, just as the reverse is the case when crude prices decline.