Iran may be raising red flag and vowing to revenge the killing of its Revolutionary Guards’ (Overseas Forces) Commander, Qasem Soleimani, in a Thursday, United States, US, airstrike, but the effect of the strike is already disrupting the price of oil, leaving a volatile development for the world economy.

Even though crude oil prices were heading higher following reports by Energy Information Administration, which revealed that crude oil inventory declined in the last week of 2019, the price soared to almost $70 per barrel, almost immediately after the attack at Baghdad Airport.

While Analysts may be concerned about the implications of the development for the global market, the prevailing situation could in a short term, benefit oil dependent economies like Nigeria.

In the 2020 budget, the Federal Government estimated oil sales to stand at 2.18 million barrels per day (bpd), at a price of $57 per barrel, while the exchange rate is expected to remain at N305 per dollar. The current development could therefore, improve budget implementation, according to Stakeholders.

With Iran’s Supreme Leader, Ayatollah Ali Khamenei, promising to retaliate, while the US is reportedly sending more troops as much as 3,500 to the Middle-East, there are indications that the development could continue to keep oil price high. President Donald Trump had said that the airstrike was ordered “to stop a war”, as well as prevent attacks on Americans.

As at last Friday, the price of a barrel of Brent crude stood at $69.16, a level last seen in September, last year, after attacks on processing facilities owned by Saudi Arabia’s State-controlled oil giant, Saudi Aramco.

The tension between the US and Iran started in 2018, when the US threatened the country’s nuclear programme, and prevented its capacity in nuclear weapons development, while re-imposing sanctions, which affected the country’s oil exports and affected its economy.



Iran produces about 4 million barrels of oil per day, but the Organisation of Petroleum Exporting Countries, OPEC, said that Iran’s oil production went down by a whopping 1.65 million bpd, since US sanctions.

Last year, the attack on Saudi Aramco temporarily forced the Kingdom to close down almost half of its oil production, as the situation pushed oil price to the current level of increase.

While the Kingdom of Saudi Arabia was able to swiftly respond to the development, most Analysts are pessimistic that the current dispute between Iran and the US would fade away quickly, considering that Iran had vowed to retaliate the killing.

While Oil Workers in Iran and neighbouring countries are reportedly leaving Oil fields as the US Embassy has ordered its citizens to leave Iran, there are indications that oil supply would suffer from any attack on Gulf Oil vessels or facilities.

The Managing Director, Oildata Energy Group, Emeka Ene, stressed the need for Nigeria to be neutral in the current geo-political face-off, while describing the development as a double-edged sword.

“The international Oil market has always been sensitive to Middle-Eastern politics. Unfortunately, this tends to create uncertainty and instability, and may drive prices up too fast for the already fragile global economy to catch up”, Ene stated.

The Director, Centre for Petroleum, Energy Economics and Law, CPEEL, University of Ibadan, Prof. Adeola Adenikinju, noted that the country must be wary of the current tension, adding that, it remains a temporary fluctuation.

“While this is a bit of a relief to oil dependent countries, they should rather plan on the basis of long-term price, which would be driven by fundamental factors of demand and supply”, Adenikinju, who is a member of the Central Bank of Nigeria’s, CBN, Monetary Policy Committee, MPC, said.

The former Chairman of the Council, Chartered Institute of Bankers of Nigeria, and Dean, College of Postgraduate Studies, Caleb University, Segun Ajibola, maintained that Nigeria and other OPEC and non-OPEC countries have benefitted from Middle-East crisis in the past, through high crude prices and increased revenue.

“Experience has shown, however, that the crisis are often stemmed quickly, even though America often triggers these for political and economic reasons. The current crisis has pushed the price to close to $70/barrel”, he said.

The Economist believes that the prevailing development is a plus for Nigeria, with the budgeted price of $56 for 2020.

“However, due to the sophistry of international diplomacy in this age, I do not see the crisis lasting for long. It is hoped that Nigeria will make the best use of the “honeymoon” while it lasts”, Ajibola stressed.

While the market remained soft currently, a former President of the Nigerian Association for Energy Economics, Prof. Wumi Iledare, expects the price impact to remain similar to the 1991 short-lived Gulf war, after the invasion of Kuwait by Iraq.

Iledare noted: “The impact on Nigeria is perhaps having to have more market outlets for its crude in the short run. I do not see much beyond that in the long run, unless we deal with the amorphous governance structure of the oil sector. According to him, the country needs to separate regulatory responsibility from policy and commercial institutions, to benefit from oil market shocks in the long run.”

https://www.akelicious.net/jubilation-in-aso-rock-as-buhari-receives-the-best-news-ever/

.

Funny heading

Fake news.

Best ke. The veggie is "moaning" the rockstar rogue

If not for anything I know say my brother's that are into forex would be cashing out massively

That's my joy about this America-Iran face up.
More money to Nigeria as i foresee budget surplus arising from crude oil sales surplus.

Venezuela would be the happiest country right now...

Iran vs usa is Nigeria's gain .I hope the effect on oil price drag for a longer period. So that Sai baba can improve on budget implementation.

Budget at $57 ,crude oil at $70 currently.this is a honeymoon for Nigeria economy

The price of oil can be 200 dollars per barrel.
But how will the high price affect or impact the Nigeria economy.

We have seen high crude price before without any significant impact on the life of the common man on the streets.

High price is just an avenue for the political class to steal more.

God help Nigeria

Hmm

Jubilation over arrant nonsense

Aufbauh:
That's my joy about this America-Iran face up.
More money to Nigeria as i foresee budget surplus arising from crude oil sales surplus.

More money that won't translate to a better life for most Nigerians

[s]

blasted12:
More money that won't translate to a better life for most Nigerians

[/s]

Ikpu1:
[s][/s]

Inyamurin akpu stay off my mentions this Sunday if you know what's good for you

[s]

blasted12:
Inyamurin akpu stay off my mentions this Sunday if you know what's good for you

[/s]

Aufbauh:
That's my joy about this America-Iran face up.
More money to Nigeria as i foresee budget surplus arising from crude oil sales surplus.

. No shout too much if not dem go come for us. ����

Aufbauh:
That's my joy about this America-Iran face up.
More money to Nigeria as i foresee budget surplus arising from crude oil sales surplus.

and wat will the government do with de surplus azactly ..loot it back to dem again

This will benefit the government in revenue generation but would be taken back through the fuel subsidy system as the production cost for refining and importing oil will increase. So what is the good news about it!!

ORIENTATION101:
Iran vs usa is Nigeria's gain .I hope the effect on oil price drag for a longer period. So that Sai baba can improve on budget implementation.

Budget at $57 ,crude oil at $70 currently.this is a honeymoon for Nigeria economy

that's if managed well , even if oil goes $200 per barrel , we will still remain the same

Nigeria has been selling oil for like 65 yes now still no impact , na $13 increase that will last for less than a month will make a difference ?

majamajic:



that's if managed well , even if oil goes $200 per barrel , we will still remain the same

Nigeria has been telling oil for like 65 yes now still no impact , na $13 increase that will last for less than a month will make a difference ?

65 for 2 years is not true

ORIENTATION101:
65 for 2 years is not true

we been selling oil for like 65 yrs now , so what will $13 increase for like 2 months do for us ?

majamajic:


we been selling oil for like 65 yrs now , so what will $13 increase for like 2 months do for us ?

2018 oil price was below 60$ for most of the year. Budget benchmark was $45 then

Mtcheeww... As if the increase in price will have any positive effect on Nigeria except of course for the greedy politicians alone..

Crude oil price increase or not, a dullard will remain a dullard. The country might as well plunge into recession again even with the increase. Abi no be Buhari again? Make I hear word abeggiii

Reminds me of gulf war
Na still loot dem loot all the money

USA want to go to war against Iran, they are happy n waiting for Iran doom coz Iran z one of bubu favourite nation n Muslim country now the report turning out to be good news for Nigeria n they are calling if fake n sort of words. They are confused generation n confused right now, they don't know who to support again.

If oil price rose to $500 , buhari's operation Loot, destroy and cripple Nigerians via whatever means necessary won't still stop.
After we all get TIN, get ready to be taxed for breathing in Nigerian air space.