By Shakrullah Owolabi
Nigeria may surpass its oil revenue target for 2022 if the current oil price level of over $90 per barrel is sustained in the months ahead.
The development signals more revenue inflow for Nigeria as this is about $35.44 a barrel over its $57 per barrel benchmark oil price as contained in the 2022 budget.
As of 8:04 a.m. EST on Tuesday, WTI Crude was down by 3.31 per cent at $92.44, and Brent Crude prices to $93.71.
The current rise in oil prices may not be unconnected with the crises between Russia and Ukraine which has led to a drastic drop in oil production targets as analysts are turning increasingly bullish on oil, with some predicting prices to hit $120.
The predictions come as fear of a potential invasion of Ukraine by Russia continues to mount.
Russia is a major exporter to the European Union, but it is also a big exporter of crude oil to the United States.
Meanwhile, the geopolitical risk premium continues to drive the oil market, as evident in today’s price move lower after Russia signaled it’s pulling some of its troops and returning them to their permanent bases in Russia.
Units of Russia’s military are heading back to base by rail and by truck at the conclusion of their drills, the Russian Defense Ministry said on Tuesday, as quoted by news agency Interfax.
The Russian Defense Ministry has also released a video showing Russian armored vehicles returning to base from drills.
Russia has denied it has plans to invade Ukraine, while the U.S. and the West have said in recent days that an invasion could be imminent.
Following the news out of Russia today, Ukraine said, as carried by the BBC, that “when we see the withdrawal, then we’ll believe the de-escalation.”
The build-up of Russian military along the border with Ukraine has rattled energy markets, with oil prices spiking amid fears that a conflict could disrupt oil and gas supplies or lead to severe sanctions against Russia’s industry, including the energy sector.
While some of the oil’s recent rally is due to the geopolitical risk premium, the other part is due to the signs of tightening market with U.S. inventories falling. Crude inventories at Cushing, Oklahoma—the designated delivery point for WTI Crude oil futures contracts—have been falling in the past five weeks. The American Petroleum Institute’s (API) inventory estimate later on Tuesday will shed light on the stockpiles as of the end of last week.
