In a bid to unlock Nigeria’s vast but underutilized heavy crude oil reserves, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) convened a pivotal industry workshop in Abuja.

The event, attended by key stakeholders from the oil and gas sector, focused on strategizing ways to accelerate the development of the country’s heavy crude assets through collaborative efforts.

Mr. Gbenga Komolafe, CEO of NUPRC, underscored the urgency and potential of Nigeria’s heavy crude reserves, which stand at approximately 1.6 billion barrels, with only a mere 5% currently developed.

Addressing participants, Komolafe said there is a need for a paradigm shift from traditional approaches to a more integrated and collaborative model involving all industry players.

“Heavy crude oil presents a significant opportunity for Nigeria’s energy sector,” Komolafe stated during his keynote speech themed “Entrenching Accelerated Development of Petroleum Prospecting Licenses (PPL) Assets and Heavy Crude Reserves Through Strategic Partnerships with Technology Drivers and Industry Service Providers.”

He highlighted the distribution of these reserves across different terrains and ownership structures, with a substantial portion located in onshore acreages.

Despite the challenges posed by the high viscosity and sulfur content of heavy crude, Komolafe expressed confidence that with the right technological innovations and collaborative frameworks, Nigeria can effectively harness these resources.

The workshop, a platform for intensive dialogue and knowledge-sharing, also addressed the regulatory frameworks introduced under the Petroleum Industry Act (PIA) of 2021.

This legislation aims to modernize the upstream oil and gas sector, streamline licensing processes, and attract new investments.

Participants discussed practical steps to enhance operational efficiency, ensure regulatory compliance, and foster sustainable development practices within the sector.

The event concluded with a commitment to implement agreed-upon best practices that prioritize efficiency, transparency, and environmental sustainability.

Brent crude oil prices edged closer to $86 per barrel as heightened expectations of a robust demand surge during the third quarter of the year.

This upward momentum comes amidst forecasts of an eventual drawdown in inventory levels and escalating geopolitical tensions in the Middle East.

As of Wednesday, Brent crude oil rose by 63 cents, or 0.7% to $85.64 a barrel, while the U.S. West Texas Intermediate (WTI) crude oil climbed 74 cents, or 0.9%, to $81.57.

“The ubiquitous view is that demand will increase during the summer,” remarked Tamas Varga, an oil broker at PVM. “Geopolitics is still seen as a supportive element of the equation.”

Despite a stronger dollar, which typically makes dollar-priced oil more expensive for buyers holding other currencies, the market remained resilient.

The dollar index was up 0.18%, underscoring currency strength amid expectations of potential rate cuts by the end of the year.

Analysts and industry experts pointed to anticipations of significant inventory drawdowns during the peak third quarter demand season as a key factor bolstering current prices.

The American Petroleum Institute (API) had earlier reported a modest increase in U.S. crude oil stocks, but market sources anticipate a substantial decline of nearly 3 million barrels in official inventory data expected later in the day from the Energy Information Administration (EIA).

“Suvro Sarkar, energy sector team lead at DBS Bank, noted, “It seems the market is shrugging off demand concerns for now, anticipating inventory drawdowns in peak third quarter demand season.”

Furthermore, strength in front-month oil prices indicated robust physical demand, a positive sign for near-term price stability and market buoyancy.

Analysts from JP Morgan highlighted in a client note that key indicators in the oil market are signaling a rebound supported by a stronger underlying physical market.

Geopolitical tensions also played a significant role in boosting oil prices. Recent incidents, including Houthi attacks on shipping in the Red Sea and escalating hostilities between Israel and Hezbollah in Lebanon, added to market uncertainties and contributed to bullish sentiments.

“The Houthis have so far sunk two vessels and seized another, and said on Tuesday they used a missile to hit a vessel in the Arabian Sea,” Sarkar explained, emphasizing the geopolitical risks influencing oil price dynamics.

As Brent crude approaches the $86 mark, attention remains focused on ongoing geopolitical developments, inventory data releases, and global economic indicators that could continue to sway oil market movements in the coming weeks.

Crude oil prices declined on Monday as the U.S. dollar strengthened and concerns over potential interest rate hikes resurfaced.

Brent crude oil, against which Nigerian oil is priced, slipped marginally by 3 cents to settle at $85.21 per barrel following a modest 0.6% decline on Friday.

Similarly, U.S. West Texas Intermediate (WTI) crude oil saw a minimal decrease of 2 cents to close at $80.71 per barrel.

Market analysts pointed to the robust performance of the U.S. dollar, which gained ground after the release of positive Purchasing Managers’ Index (PMI) data on Friday.

Tony Sycamore, a markets analyst at IG in Sydney, noted, “The U.S. dollar has opened bid this morning and appears to have broken higher following better U.S. PMI data on Friday night and political concerns ahead of the French election.”

A stronger dollar typically makes dollar-denominated commodities like oil less attractive for holders of other currencies, putting downward pressure on prices.

Last week, however, both Brent and WTI crude contracts managed to gain approximately 3% each.

This was largely driven by increasing signs of demand recovery for oil products in the U.S., the world’s largest consumer of crude oil. Additionally, ongoing supply constraints enforced by OPEC+ further supported market sentiment.

According to ANZ analysts, U.S. crude inventories continued their decline while gasoline demand recorded a seventh consecutive weekly rise.

Moreover, jet fuel consumption has rebounded to levels last seen in 2019, indicating a robust recovery in travel-related fuel demand.

Speculative activity in the oil market has also been notable, with analysts from ING observing an increase in net-long positions in ICE Brent as traders adopt a more positive outlook heading into the summer months.

“We remain supportive towards the oil market with a deficit over the third quarter set to tighten the oil balance,” they stated.

Despite these bullish indicators, geopolitical tensions persisted, providing a floor for oil prices.

Escalating conflicts in the Middle East, including the Gaza crisis and increased drone attacks on Russian refineries by Ukrainian forces, continued to underpin market sentiment.

In South America, Ecuador’s state oil company Petroecuador declared force majeure on deliveries of Napo heavy crude for exports due to severe weather conditions.

Heavy rains led to the shutdown of a critical pipeline and oil wells, impacting production and exports.

Meanwhile, in the U.S., the number of operating oil rigs fell by three to 485 last week, marking the lowest count since January 2022, according to Baker Hughes’ weekly report.

Looking ahead, the interplay between the U.S. dollar’s strength, geopolitical developments, and economic indicators such as PMI data will likely dictate short-term oil price movements.

Investors and analysts remain vigilant for any shifts in these factors that could influence global oil market dynamics in the coming weeks.