On Saturday, February 25, Nigerians headed to the polls to elect their new president and lawmakers. The country’s election umpire, the Independent National Electoral Commission (INEC), is currently collating the election results.
Meanwhile, Nigeria’s Bonny Light crude is holding steady as the world awaits the 2023 Presidential and National Assembly election results. The country’s Bonny Light crude maintained a steady price at $83.08 per barrel since Friday, February 24.
As of Monday night, February 27, the benchmark showed a 0.57% chance at $82.51 per barrel and has remained relatively steady. Days before the election day, Bonny Light’s crude oil price was at $83.72 per barrel as of Monday, February 20.
Nigeria’s crude oil production has recently increased to 1.6 million barrels per day as announced by the Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari on February 17.
Now, the country is looking forward to increased investments in its crude oil sector, which will further increase the country’s oil production capacity.
In the meantime, however, the country’s new president needs to emerge. That will reflect positively on the economy which has seen a lot of challenges in the last eight years. Recall that the National Bureau of Statistics (NBS) recently released a report showing that 133 million Nigerians are living in multidimensional poverty. Also, the country’s current inflation rate stood at 21.82% as of January.
Therefore, Nigeria needs a president who will effectively tackle the country’s economic challenges. Selecting such a president will send a positive signal to potential investors and this will likely have a positive effect on the Bonny Light crude.
Likely impact of the election on the benchmark: In a conversation with Nairametrics, oil and gas analyst, Kayode Oluwadare, said he does not believe there will be a significant change in the country’s benchmark after the election results are announced. This is because the crude oil market is internationally driven. He said:
- “Different countries have different benchmarks but each of these country-based or region based are directly linked to major international benchmarks, like Bonny Light is linked to the Brent Crude benchmark.
- “Most of the swings and volatility that we might see from Bonny Light has more to do with international than domestic factors. Oil deals and trade are internationally driven. I do not expect the election outcome to have a major effect on Bonny Light. However, if there is a major factor like protests over the results or a war, there will be an impact on the benchmark because Nigeria is a major crude oil producer in Africa.”
What you should know: According to Oluwadare, the top three candidates running for president can positively influence the benchmark if elected to office. He said that Bola Tinubu of the All-Progressives Congress once worked with Mobil Nigeria and understands the business of crude oil due to his experience working with an international oil company.
He also said that Peter Obi of the Labour Party is knowledgeable in international trade and as oil is an international commodity, Obi’s influence could have a major impact on Nigeria’s crude trade potential.
Meanwhile, Atiku Abubakar of the People’s Democratic Party was once a Vice president and during his tenure, Nigeria enjoyed good economic development, and this could be a plus if he emerges president as he understands the nuances of running a successful economy.