Hopes that the deficit in Nigeria’s budget financing for the current year may be lower than earlier projected has brightened as Brent crude oil prices jumped above $65 per barrel after the shutdown of the Forties North Sea pipeline.
In the 2017 budget, the Executive had set the crude oil benchmark at 2.2 million barrels per day at a price of $42.5 per barrel, before the National Assembly raised the benchmark to $44.5 a barrel.
The Fortis North Sea pipeline breakdown closed substantial crude oil supplies to the international oil market that was already tightening due to OPEC-led production cuts.
As at 0211 GMT today, Brent crude futures, the international benchmark for oil prices, rose to $65.07 dollars a barrel while the U.S. West Texas Intermediate (WTI) crude futures were at 58.21 dollars a barrel.
Britain’s Forties oil pipeline with a capacity of 450,000 barrels per day (bpd), shut down on Monday after cracks were revealed.
Reacting to the development, ANZ bank stated that “the market reaction shows that in a tight market, any supply issue will quickly be reflected in higher prices.”
Despite its positive fiscal implications for commodity exporting countries like Nigeria, the jump in Brent prices, however, widened its premium to WTI prices, making U.S. oil exports more attractive.