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Oil is trading at $74.29 a barrel Thursday, its highest level in more than three years lifting prospects of foreign exchange reserve accretion in cash strapped exporting countries like Nigeria.
Nigeria has seen its foreign exchange reserve rise to $47bn with the local FX market witnessing an usually long period of stability recently.
The rise in oil price came as US crude inventories declined and top exporter Saudi Arabia began to push for higher prices by continuing to withhold supplies.
New data show that the much watched level of US crude inventories fell by 1.1m barrels giving fillip to the market.
The US stockpile data came on a day that leading exporter Saudi Arabia said it would be happy to see crude rise to 80 $/bbl or even 100 $/bbl, three industry sources said.
Analysts are taking this as a sign Riyadh will seek no changes to an OPEC supply-cutting deal even though the agreement’s original target is within sight.
OPEC, Russia and several other producers began to reduce supply in January 2017 in an attempt to erase a glut. They have extended the pact until December 2018 and meet in June to review policy.
Meanwhile, Oil investors are taking no chances that Iran’s nuclear deal with Western powers will remain intact next month. Volatility, a measure of options demand, for options that allow the holder to buy Brent futures between 75 $/bbl and 80 $/bbl, has risen this week above 30% to its highest since late 2016.
