Brent crude oil, against which Nigerian oil is priced, appreciated by 0.9% to $123.21 per barrel at 12:00 pm Nigerian time amid concerns over tight global supply and other uncertainties.
The price of Brent crude oil appreciated on reports that OPEC and allies are struggling to deliver on pledged production increases because of the capacity issues in many members, Russian crude oil sanctions and the unrest that is disrupting production in Libya.
Oil price has been on the increase since Russia invaded Ukraine in February, pushing the price of Brent crude oil to $139 a barrel in March, its highest since 2008. Other uncertainties like rising COVID-19 infections, slowing global growth and the inability of OPEC plus members to meet production targets continue to disrupt the oil outlook.
“We were struggling with the Russian loss (of oil) so now add an exclamation point with the Libyan situation,” said Robert Yawger, executive director of energy futures at Mizuho.
UBS Group AG, a leading multinational investment bank and financial services, increased its Brent price projection to $130 a barrel for end-September and $125 for the final quarter of the year, up from $115 previously forecast.
The bank said, “low oil inventories, dwindling spare capacity, and the risk of supply growth lagging demand growth over the coming months have prompted us to raise our oil price forecast.”
In a note to Investors King, Jeffrey Halley, senior market analyst at OANDA, said lack of investment and the continuous dropped of refined products show global market is nowhere near covering lost Russian production.
He said, “The continuing squeeze on refined products globally, as well as a lack of investment to bring online more supplies from OPEC members, or other sources, means lost Russian production is nowhere near being covered by global markets.”
