Early trade on Friday, March 8 2024, revealed the spike in oil prices due to high demand from the world’s largest users, the United States and China. The increase in the price rate was reinforced by the Federal Reserve’s positive outlook on possible rate cuts.
As of 0415 GMT, Brent crude futures rose at 0.6%, or 49 cents, to $83.45 per barrel. Similarly, leading 0.7% or 60 cents to $89.53 futures rose in the US West Texas Intermediate (WTI).
Despite these gains, both benchmarks indicated a modest decline for the week, making Brent and WTI fall by 0.1% and 0.5%, respectively.
A report from The Energy Information Administration highlighted a significant decrease in US fuel stockpiles last week, with gasoline reserves dropping by 4.5 million barrels and distillate inventories falling by 4.1 million.
The significant unexpected fall pushed for a compulsory high and strong demand by the United States and China. In early 2024, China recorded a 5.1% increase in crude oil imports over the previous year.
Meanwhile, India’s gasoline consumption increased 5.7% year on year in February, owing to vigorous manufacturing activity in the country, which is the world’s third-largest oil importer and consumer.
Presently, the rise in crude oil prices corresponds with OPEC+’s decision to reduce output voluntarily—a move primarily supported by Saudi Arabia and Russia.
In response to this, the President of Nigeria, Bola Ahmed Tinubu, earlier this week issued a series of executive directives to expand oil production and investment in the sector.
The directives and new guidelines seek to increase fiscal incentives for oil and gas projects, cut contracting costs and deadlines, and promote cost-effective local content requirements.
The OPEC’s monthly oil market report says Nigerian crude oil production increased to 1.65 million barrels in January. However, President Tinubu’s administration intends to increase crude oil production to attain his $1 trillion GDP target within the next three years.
Given this, there are closed-door meetings between the government and petrol marketers to reduce the petrol price in the country.
