Brent Crude Oil Trades Near $120 Per Barrel on Thursday

Global uncertainty amid flying rockets in Ukraine bolstered the price of Brent crude oil to $119.78 per barrel in the early hours of Thursday before paring gains to $118.72 as at 9:26 am Nigerian time.

Oil traders are predicting that the global oil supply will remain short for months on the back of growing sanctions on Moscow and given the number of major oil companies that are divesting from the Russian oil industry.

“It increasingly looks like the market is pricing in a supply disruption to at least part of the nearly 4 million barrels per day of oil that is sold into the U.S. and EU,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

The price of Brent crude oil rallied into the close of trading on heavy volume to close at its highest level since June 2014, while the U.S West Texas Intermediate closed at its highest since May 2011.

Since Russia invaded Ukraine on February 24, prices of commodities have gone up with the jump in global risk and economic uncertainty. Global businesses like Visa Inc, MasterCard, etc have shut down operations in Russia in an effort to obey a series of sanctions imposed on the Eastern nation.

Nigeria and other commodity-dependent nations are expected to take advantage of the increase in price. However, Nigeria has failed to up its crude oil production due to weak infrastructures and several other internal factors.

Africa’s largest economy still spend billions on subsidy for most Nigerians to afford fuel. With crude oil now trading at a record-high, the Federal Government will be spending its expected gain on subsidy for finished petroleum products. Practically, Nigeria is not expected to profit from the rising oil prices.