Improved demands of fuel have boosted oil prices to the highest levels in years.
Gatekeepers News reports that global oil prices have continued to go upward on the back of strong fuel demand in western economies.
As of the time of filing this report on Wednesday, Brent crude futures were up 42 cents, or 0.6percent, at $72.64 a barrel, having earlier touched $72.83 — the highest since May 20, 2019.
Also, U.S. West Texas Intermediate (WTI) crude futures climbed 35 cents, or 0.5percent, to $70.40 a barrel, after rising to as high as $70.62, which was the highest since October 17, 2018.
Energy analysts had said the widespread faith that oil demand growth will trend significantly higher in the second half of the year is paving the way forward for the price rally.
Following the impact of the coronavirus pandemic, crude oil prices have suffered a huge decline globally.
Countries who depended largely on crude oil earnings like Nigeria were badly hit by the decline in oil prices, as this affected several economies globally.
However, oil prices are gradually recovering globally as vaccine rollout keeps increasing.
Nevertheless, there’s an uneven short-term demand amid concern that the new virus variants will lead to more lockdowns, while vaccine rollouts in some countries are slower than expected.
Crude oil which accounts for just eight per cent of Nigeria’s Gross Domestic Product (GDP), contributes over 90 percent of the country’s foreign exchange earnings.
On December 31, 2020, President Muhammadu Buhari signed the 2021 budget based on an oil price benchmark of $40 per barrel and a production level of 1.86 million barrels per day.
The rise in the crude price indicates good news for the Nigerian economy, as this will increase the country’s revenue needed for the implementation of the 2021 budget, improve crude oil receipts, and also strengthen the foreign exchange inflows.
Meanwhile, the lengthy high oil prices will ultimately feed into a rise in petrol’s landing cost, which means an increase in fuel price.
