The price of Brent crude surged 4% to $80.52 per barrel above Nigeria’s 2024 budget benchmark price of $77.96 per barrel.
This is coming on the heels of the U.S. and Britain’s announcement of airstrikes against Yemeni Houthi rebels around the Red Sea.
Brent futures saw a recent increase of 4%, reaching $80.52 per barrel, while U.S. West Texas Intermediate (WTI) crude experienced a 4.1% rise, reaching $74.99.
Susannah Streeter, head of money and markets at Hargreaves Lansdown told Reuters that the ongoing conflicts in the Middle East could push oil prices by up to $10 per barrel and gas prices up to 25% higher if the conflict continues.
- She stated, “Reports coinciding with the UK/US military action suggest the British government is modelling scenarios which could see prices rise by $10 a barrel, if the Red Sea crisis continues, with gas prices at risk of going up by 25%,”
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- Higher crude oil prices represent a double-edged sword for Nigeria. While it can put more revenues in the coffers of government which it can use to meet its obligations, it could also lead to higher petrol prices, especially since the deregulation of the downstream sector in June last year.
- The price of PMS across Nigeria has increased by over 200% since the removal of the costly fuel subsidy in 2023 according to the National Bureau of Statistics.
- Higher crude oil prices also mean more foreign exchange receipts for the Federal government which it can use to shore up the falling naira. The naira has lost almost 100% on the official market since the unification of the foreign exchange market from N461/$ in June to N874/$ just yesterday according to Nairametrics daily FX market monitor