Brent Cude Oil Price Rises To $79 A Barrel
Global Crude Oil Prices Surge to $79 as Geopolitical Tensions Escalate.
In a significant development, Brent crude oil prices experienced a notable 2.3% surge, reaching $79 per barrel on January 12, 2024. A comprehensive analysis by MyFinanceNG at 01:54 GMT+1 reported that Brent was actively trading at $79.22 per barrel during this period.
This surge in Brent crude prices, along with West Texas Intermediate (WTI) benchmarks, can be attributed to recent military actions by the United States and Britain against Houthi military targets in Yemen. This retaliatory move followed attacks by the Iran-backed group on shipping in the Red Sea, dating back to late last year.
According to reports from Reuters, the U.S. and British airstrikes mark a significant escalation in the Israel-Hamas conflict in the Middle East, which began in October. The airstrikes were conducted in response to attacks imperiling freedom of navigation in the Red Sea. Notably, Australia, Bahrain, Canada, and the Netherlands have expressed support for this joint operation.
The disruption caused by Houthi assaults in the Red Sea has had a profound impact on global trade, affecting approximately 15% of the world’s maritime traffic. Since October, the Houthis have targeted commercial ships, leading to disruptions that prompted shipping giant Maersk to reroute all vessels away from the Red Sea indefinitely.
Adding to the geopolitical tension, Iran’s recent seizure of a tanker carrying Iraqi crude intended for Turkey has further intensified the situation. This action is perceived as retaliation for a similar incident where the U.S. confiscated the vessel and its oil last year. The White House has strongly condemned this recent seizure.
Focusing on oil production dynamics, a Bloomberg survey revealed that the Organization of Petroleum Exporting Countries (OPEC) maintained steady crude oil production at an average of 28.05 million barrels per day (bpd) in December 2023. Nigeria contributed to this stability by boosting output by an additional 50,000 bpd.
While OPEC+ continued supply restraints, with countries like the United Arab Emirates and Angola reducing production, Nigeria compensated for the reduction. According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the country’s daily oil production currently stands at 1.25 million barrels.
OPEC+ projections indicate that Nigeria is expected to produce 1.5 million bpd in 2024, despite the federal government suggesting the potential for production as high as 2 million bpd this year. Middle Eastern countries, including Saudi Arabia, maintained strong compliance with announced production cuts, implementing additional voluntary reductions.
For the first quarter of 2024, OPEC+ had previously announced 2.2 million bpd of cuts. This includes Saudi Arabia rolling over its voluntary cut, Russia deepening crude and fuel export cuts by 200,000 bpd, and several other OPEC+ members declaring voluntary production reductions. The evolving geopolitical landscape continues to shape the trajectory of global crude oil prices, underscoring the importance of monitoring these developments in the energy markets.