Oil prices jumped on Tuesday after increasing energy demand from China, world’s second-largest oil consumer.
As at 11:06 am, the price of Brent crude, the grade at which Nigeria’s crude oil is benchmarked, gained 0.61 percent to $63.89 per barrel, while the American benchmark West Texas Intermediate (WTI) soared by 0.46 percent to $60.22 per barrel.
Analysts and market watchers said exports grew at a robust pace in March this year in yet another boost to the China’s economic recovery as global demand picks up amid progress in COVID-19 vaccinations globally.
Crude oil imports into China jumped by 21 percent in the same month from a low base of comparison in 2020 as refiners ramped up operations amid robust fuel demand.
READ ALSO: 32 Refinery Licences Invalid, Says DPR
Also supporting prices is the tensions in the Middle East after the Yemen-based Houthi movement said it fired missiles on Saudi oil sites.
On Monday, the Yemen’s Iran-aligned Houthi movement said it had fired 17 drones and two ballistic missiles at targets in Saudi Arabia, including Saudi Aramco facilities in Jubail and Jeddah.
Market analysts say the rise in geopolitical tension in the Middle East will only have a notable bullish impact on oil prices if it is coupled with actual physical supply disruption.
Also, the slow rate of vaccinations in some European countries and anticipation of additional supply of oil from Iran in the coming months capped price gains.
Meanwhile, Nigeria’s Bonny Light crude was priced at $62.20 per barrel, while both the Brass River and Qua Iboe were sold at $61.48 per barrel.
Oil price has been on a tear with gradual reopening of economic activities and increased COVID vaccine distribution.
The rise in crude oil comes a boost to Nigeria’s revenue and foreign exchange earnings.
The 2021 budget, which was signed by the President Muhammadu Buhari on December 31, 2020, was based on an oil price benchmark of $40 per barrel and a production level of 1.86 million barrels per day.
Recently, the International Monetary Fund (IMF) projected growth of 2.5 percent for Nigeria in 2021 from 1.5 percent announced in January.