The global oil benchmark, Brent crude, rose as much as two per cent on Monday as Nigeria’s oil industry reeled from crippling attacks that have pushed output to its lowest level in more than 20 years.
The uptick in oil price is coming at a time Iran, which is engaged in a battle for market share in a bid to regain customers after years of curbed oil sales that crippled its economy, is ramping up its production and exports.
Output of Nigeria’s Bonny Light crude has fallen by an estimated 170,000 barrels per day following recent attacks on pipeline infrastructure, industry sources said on Monday. Total crude production has fallen by more than 500,000 bpd in a country that was once Africa’s biggest oil producer.
Supply outages from elsewhere, including Canada, Libya and Venezuela, are also forcing United States refiners to draw more from domestic crude stockpiles, according to Reuters.
“At this point, there is no sign that the Nigeria situation is getting any better, and it’s looking worse,” said Scott Shelton, energy broker with ICAP in Durham, North Carolina.
Any spare US refining capacity arising from optimum refinery runs during the summer might not be enough to balance the market without deeper stock drawdowns that would support crude prices more, he said.
Brent, against which Nigeria’s oil is priced, stood at $50.32 a barrel by 6:50pm on Monday, after reaching a session peak of $50.83, the highest since November.
On Friday alone, militants staged three attacks in Nigeria’s Niger Delta, promising to cut output to zero.
Meanwhile, more than 25 European and Asian-owned super tankers are shipping Iranian oil, data seen by Reuters shows, allowing the country to ramp up exports much faster than analysts had expected following the lifting of sanctions in January.