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Oil prices rose to a high for the year near $70 a barrel on Wednesday bringing with it significant implications for Nigeria and other oil dependent economies that must fund their annual budgets from crude export.
Analysts said Oil is extending a rally on Opec’s intentional production cuts and the sanction-hit output of Venezuela and Iran.
Brent crude, the international benchmark, hit a 2019 high of $69.96 a barrel in early trading, up 0.7 per cent to the highest since November. US benchmark West Texas Intermediate rose to a high of $62.99.
Oil prices have bounced in 2019 following a brutal sell-off in the fourth quarter, which dragged Brent prices from a four-year high above $86 a barrel in October to near $50 a barrel by the end of the year.
The recovery has come as Saudi Arabia has led Opec in slashing output to compensate for fast-growing production from US shale, while Venezuela and Iran’s output has fallen sharply due to US sanctions.
Price gains have so far been capped below $70 a barrel, however, due to the ongoing threat of a further jump in shale production and pressure from US president Donald Trump on Opec not to over tighten the market.
PVM analyst Stephen Brennock said there was “a growing sense of inevitably that this stubborn barrier will soon be vanquished” but cautioned it may “take one more catalyst” to push above $70 a barrel.
