With the rise in crude oil demand globally, following recovery from COVID-19 impact, which crashed supplies, there are indications that oil prices may hit $90 per barrel before the end of 2021.
This is coming even as crude oil extends gains at the start of the week with Bonny Light trading at $76.38 per barrel, the highest level since October 2018, while West Texas Intermediate traded at $75 a barrel after a run of five weekly gains.
Brent traded at the international market at $79.09 per barrel, also the highest level since October 2018.
According to an energy analyst with Goldman Sach Group, Damien Courvalin, “While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts.
“Brent could hit $90 a barrel by year-end as the market is in a bigger deficit than many realized. This deficit will not be reversed in coming months, in our view, as its scale will overwhelm both the willingness and ability of Organisation of Petroleum Exporting Countries, OPEC+ to ramp up.”
With the current demand, OPEC in its next meeting (October 4, 2021) might be forced to ask member countries to increase their production quota next month to ease the demand, and the development will further drive the price much higher.
Energy Vanguard had reported that, OPEC in its September Monthly Oil Market Report (MOMR), noted that Nigeria produced 1.23mb/day in August, as against 1.32mb/day produced in July.
Nigeria quota based on the agreement reached by OPEC and its allies to raise production by 400,000b/day, is set to be 1.6mb/day.
Also, an energy expert Mr. Henry Adigun, in a chat with this medium, stated that the huge cost of restarting a field, instability in fiscal terms and vandalism were responsible for Nigeria’s low production level in the past.
“Although, I am optimistic that with the stable oil price and fiscal terms, Nigeria’s crude oil production would improve in September.”