As an oil-producing country, there is a likelihood that Nigeria may benefit from the surge in oil prices after two attacks on Saudi Arabian facilities on Saturday knocked out more than 5% of global supply.
While the attack on Saudi Aramco could cause a drastic shortage in global oil supply, and drive oil revenue [but also increase subsidy cost or increase the price of fuel], Nigeria’s oil supply cut by the Organization of the Petroleum Exporting Countries (OPEC) may, however, change the dynamics for Nigeria.
if Saudi Arabia’s output is disrupted for a significant amount of time – meaning weeks at least – Asian buyers seeking heavier grades of crude to feed their refineries will have a reason to try to take more from Nigeria regardless.
– Brent crude jumped 10% to $66.28 a barrel, while West Texas Intermediate rose 8.9% to $59.75 in Asian trading.
The Saudis have not gone into any detail about the attacks, barring saying there were no casualties, but have given a few more indications about oil production.
Energy Minister Prince Abdulaziz bin Salman said some of the fall in production would be made up by tapping huge storage facilities.
The kingdom is the world’s biggest oil exporter, shipping more than seven million barrels daily.
“Saudi authorities have claimed to control the fires, but this falls far short of extinguishing them,” said Abhishek Kumar, head of analytics at Interfax Energy in London. “The damage to facilities at Abqaiq and Khurais appears to be extensive, and it may be weeks before oil supplies are normalised.”
Saudi Arabia is expected to tap into reserves so that exports can continue as normal this week.
However, Michael Tran, managing director of energy strategy at RBC Capital Markets in New York, said: “Even if the outage normalises quickly, the threat of sidelining nearly 6% of global oil production is no longer a hypothetical, a black swan or a fat tail. Welcome back, risk premium.”