Crude oil prices continued their upward trend on Tuesday following significant gains recorded the previous day.

The increase was driven by concerns over supply disruption in Iraqi Kurdistan, as well as hopes that turmoil in the banking sector is being contained.

Brent crude oil, against which Nigerian oil is priced, rose by 0.4% to $78.44 a barrel while the West Texas Intermediate U.S. crude oil was up 0.4% to $73.07 per barrel.

These gains were recorded after prices surged more than $3 on Monday, largely because of the reports that Iraq halted exports of about 450,000 barrels per day from its northern Kurdistan region through Turkey.

According to Barclays, the Iraqis issue could last unit the end of the year. The bank, therefore, revised upward its prediction by $3 to $92 a barrel for Brent for 2023.

The announcement that First Citizens BancShares Inc will acquire deposits and loans of Silicon Valley Bank also contributed to the positive sentiment, sending European bank shares higher.

However, PVM Oil analyst Tamas Varga warned that concerns about financial stability could still trigger a flight out of risk, saying, “At the moment, concerns about the risk to financial stability have been relegated to the back of investors’ minds, but another bank run could trigger a flight out of risk again.”

China’s crude oil imports are expected to rise by 6.2% in 2023 to 540 million tonnes, according to a forecast by a research unit of China National Petroleum Corp. This is expected to further support oil prices, as is Russia’s focus on boosting energy exports to friendly countries.

Meanwhile, U.S. crude oil stockpiles were seen rising by about 200,000 barrels last week, according to a preliminary Reuters poll. The American Petroleum Institute will publish its inventory data later on Tuesday, followed by the U.S. Energy Information Administration on Wednesday.

The downstream sector of the Nigerian oil and gas industry is set to undergo complete deregulation in the coming months, and industry stakeholders are warning that Nigerians should prepare for petrol prices as high as N750 per litre at filling stations.

During an online workshop, organised by industry stakeholders in collaboration with the African Refiners and Distributors Association (ARDA), participants outlined strategies and measures that should be deployed to ensure sustainable removal of petrol subsidy.

National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Chinedu Okoronkwo, warned Nigerians of the impending price hike and urged the government to channel expected savings from subsidy removal to provision of palliatives for the masses.

Although the projected pump price is likely to drop to around N500 if the government encourages the Central Bank of Nigeria (CBN) to provide foreign exchange for marketers at the official rate, the high cost of petrol will undoubtedly have a significant impact on the already struggling Nigerian economy.

Nigeria is currently struggling to find buyers for its crude oil, with strikes in the French refining sector and seasonal maintenance at plants elsewhere in Europe cutting into the Organisation of Petroleum Exporting Countries (OPEC) producer’s sales.

In light of these challenges, former Chief of Policy and Plans, Nigerian Navy, Rear Admiral Henry Babalola (rtd), called on the federal government to prosecute persons involved in oil theft for treason. Babalola expressed disappointment with the government’s poor handling of the oil theft issue, which he said was destroying the country’s revenue base.

The deregulation of the downstream sector is expected to end the wasteful petrol subsidy regime before the end of President Muhammadu Buhari’s tenure on May 29, 2023.

As Nigerians brace for the anticipated price hike, it is crucial that the government implements appropriate palliatives to alleviate the burden on the masses and ensure transparency in communication about the issue.

Oil prices rose on Monday as investors evaluated efforts by authorities to address concerns about the global banking system.

Brent crude oil, against which Nigerian oil is priced increased by 1.03% or 77 cents, reaching $75.76 a barrel at 9:00 am, while the US West Texas Intermediate crude rose by 1.03% or 74 cents to $70 a barrel. This follows a 2.8% increase in Brent and a 3.8% rebound in WTI as concerns in the banking sector decreased.

Despite the oil fundamentals remaining on the sidelines, crude markets are observing the sentiment in the financial market, according to Vandana Hari, the founder of oil market analysis provider Vanda Insights.

Hari stated, “Expect most price action in Brent and WTI futures to occur during the Europe and US trading hours, marked by plenty of intraday volatility.” Hari added that a strong rebound is not expected until the banking crisis is fully resolved, which may take days or weeks.

In other news, First Citizens BancShares Inc announced that it will acquire the deposits and loans of Silicon Valley Bank, closing one chapter in the financial market crisis. Furthermore, the US authorities are reportedly discussing expanding emergency lending facilities, which has given hopes for additional support for bank funding.

Oil prices have also gained support from Russian President Vladimir Putin’s announcement to place tactical nuclear weapons in Belarus, which has escalated tensions in Europe. It is one of Russia’s most significant nuclear signals yet, and it serves as a warning to NATO over its military support for Ukraine.

In response, Ukraine has called for a meeting of the United Nations Security Council, and NATO criticized Putin’s “dangerous and irresponsible” nuclear rhetoric.

Despite the rise in oil prices, Russia’s Deputy Prime Minister Alexander Novak has reported that Moscow is on the verge of achieving its target of reducing crude output by 500,000 barrels per day (bpd) to around 9.5 million bpd.

However, according to industry sources and Reuters calculations, Russia’s crude exports are expected to remain steady as it cuts refinery output in April. Since September 2022, Russian crude stocks have been increasing, and experts suggest that if Russia wants to draw down the inventories it has built, output cuts may need to be extended beyond June.

Meanwhile, in France, industrial action is affecting refineries, reducing crude demand and fuel production. Investors are awaiting China’s manufacturing and services purchasing managers’ indexes for cues on demand from the world’s leading crude oil importer.

According to Baker Hughes Co, oil rigs rose by four to 593 last week in the US, up for the first time in six weeks, while gas rigs held steady at 162.