Nigerian oil trades $2 higher than active brent contract

Nigerian oil blends drew closer to the $80 per barrel mark once again, as the Iran-backed militias-Israeli conflict momentarily changed the dynamics of the oil market.

Nigeria’s Brass River, Bonny Light, and Qua Iboe are slightly higher than $77 a barrel, over $2 pricier than the most active Brent contract.

Oil prices rose in trading on Thursday, as oversupply was eclipsed by the potential for a shift in the Middle East that could restrict the flow of crude oil from this notable exporting region.

Brent crude futures for February rallied by over 130 basis points to trade at $74.84 per barrel in the early part of the London trading session. Brent crude for January added 1.41% to stay above $71 a barrel. Both benchmarks had gained over a dollar earlier in the session.

Beirut Central was attacked by Israeli airstrikes early this morning, killing at least six people after Israel’s forces had their deadliest day in over a year, engaging with Hezbollah fighters in Lebanon. The airstrike comes just after Iran launched 180 ballistic missiles at the region of Israel, escalating further hostilities that had already begun to spill over from Israel and the occupied Palestinian territories to Lebanon and Syria.

At the same time, however, the United States crude stockpile increased by 3.9 million barrels to 417 million barrels for the week ending September 27, as published by the EIA. Some participants remained in a profit-taking mood, as crude oil has so far not been affected by the disturbances in the oil-producing region, and additional production capacity available to OPEC eased concerns. OPEC has enough spare oil capacity to compensate for a complete loss of Iranian supply if Israel targets Iran’s oil installations.

However, oil traders remain jittery that the oil cartel would likely struggle if Iran retaliated by hitting the installations of its Gulf neighbors.

FG Incentivizes Oil Stakeholders to Boost Investment

The kick-off of the Dangote Refinery, coupled with the lifting of the subsidy on petrol, marks a new dawn in Nigeria’s energy industry. The Federal Government is also positioning the sector to realize the benefits of oil and gas resources in accelerating the socio-economic progress of its people.

It is anticipated that the new Petroleum Industry Act of 2021 will be employed as a measure to advance foreign direct investments into the oil and gas sector of the Niger Delta region and Nigeria’s infrastructure development. Policies on tax incentives and concessions have recently been announced to promote the development of Nigeria’s oil and gas business in both upstream and downstream segments.

Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, revealed the two key fiscal measures on Wednesday, adding that they were part of the initiatives put in place to address the deactivation of the Nigerian oil and gas industry. New tax breaks are also available for deep offshore projects through the Notice of Tax Incentives for Deep Offshore Oil and Gas Production. The objective is to make Nigeria’s deep offshore basin a top choice for international oil and gas investments.

The presidential spokesperson recently announced ExxonMobil’s $10 billion investment in Nigeria’s offshore oil operations. The investment proposal was disclosed during a meeting between Exxon’s CEO for Nigeria, Shane Harris, and Nigerian Vice President Kashim Shettima. The Owo project, a significant deep-water endeavor, is a key component of Exxon’s investment strategy.