Oil price may hit $120 / barrel as hostilities intensify in Iran
The hostilities between Iran, U.S and Israel may push oil price to a record $120 per barrel if the situation does not abate this week. The continued disruption to oil
- Fuel price changes driven by market forces, says NMDPRA
The hostilities between Iran, U.S and Israel may push oil price to a record $120 per barrel if the situation does not abate this week. The continued disruption to oil tanker movements through the Strait of Hormuz has been a major issue. As at yesterday night, China remained in talks with Iran to allow passage of its vessel through the channel.
Expressing concerns over the development, Goldman Sachs warned that oil prices are likely to exceed $100 per barrel next week if no signs of a solution emerge to the severe disruption in flows through the Strait of Hormuz, warning that upside risks to its base‑case forecast are rapidly growing further. The bank said it plans to revisit its oil price forecast soon if it does not see evidence supporting its assumption of a gradual normalisation in Strait of Hormuz flows over the next few days. Its current base‑case Brent forecast is in the $80s for March and the high $70s for the second quarter.
“We now also think it’s likely that oil prices, especially for refined products, would exceed the 2008 and 2022 peaks, if Strait of Hormuz flows were to remain depressed throughout March,” it added. Goldman Sachs currently estimates that average daily flows through the Strait of Hormuz are down 90 per cent.
Meanwhile, Barclays said that Brent crude could potentially test $120 a barrel if the Middle East conflict persists for another couple of weeks.
The ripple effect has manifested locally as petrol now sells for between N1,033 and N1, 80 per litre at retail outlets across the country.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) blamed the fluctuations in fuel pump prices as a direct result of market dynamics under Nigeria’s deregulated downstream petroleum sector.
The authority’s spokesperson, George Ene-Ita, made this known in Abuja while reacting to the recent increase in fuel pump prices linked to the ongoing Middle East crisis.
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Many motorists have expressed concern and dissatisfaction over the recent hike in prices of the commodity which were previously sold between N875 and N880 per litre.
Currently, independent marketers are selling fuel between N960 and N1,000 per litre and above, while outlets of the Nigerian National Petroleum Company Limited are selling at about N960 and N1,050 per litre.
Ene-Ita said the variations in pump prices across the country were not due to regulatory interference but were driven by supply and demand forces within the market.
“Nigeria has been operating a fully deregulated downstream petroleum regime since the inception of the current administration.
“Therefore, pump price vagaries are purely as a result of market dynamics,” he said.
He explained that under a deregulated framework, petroleum product prices responded to prevailing market conditions.
He added that the policy direction was aimed at allowing market forces to determine prices while encouraging competition, efficiency and increased investment in Nigeria’s downstream oil and gas sector.
