Oil prices sustained surging trend for the third day in session on Monday, with Brent rising above $81 per barrel, representing its highest price in more than four months, as U.S. sanctions are expected to affect Russian crude exports to China and India.
A news report from Reuters early today indicated that Brent crude futures climbed $1.47, or 1.84%, to $81.23 a barrel by 0503 GMT after hitting an intraday high of $81.49, the highest since August 27 last year.
Similarly, U.S. West Texas Intermediate crude price rose by $1.55, or 2.02% to $78.12 a barrel after it sold for $78.39 on October 8, 2024.
Brent and WTI have risen by more than 6% since January this year and both contracts surged after the U.S. Treasury imposed wider sanctions, including producers Gazprom Neft and Surgutneftegas, as well as 183 vessels that have shipped Russian oil, targeting the revenue Moscow has used to fund its war with Ukraine on Russian oil, on Friday.
Industry experts expect Russian oil export to be hurt severely by the new sanctions, pushing China and India, the world’s top and third-largest oil importers respectively, to source more crude from the Middle East, Africa and the Americas, which will boost prices and shipping costs.
For instance, in a Note on Friday, Goldman Sachs analysts stated: “Friday’s announcement strengthens our view that the risks to our $70-85 Brent range forecast are skewed to the upside in the short term.
“We estimate that the vessels targeted by the new sanctions transported 1.7mb/d of oil in 2024 or 25% of Russia’s exports, with the vast majority being crude oil”, the analysts added.
Nigeria is expected to gain from the surging crude prices and the promising outlook of the global oil market this year based on the proposed oil price benchmark of $75 per barrel, an oil production target of 2.06 million barrels per day in the 2025 Appropriation Bill when enacted into law.
A rough estimate indicates that if the 2.06 million barrels per day target is met by the country, its excess foreign exchange (FX) earnings per day could be up to $12.36 million.
