Crude jumps 8% on ceasefire collapse, marketers mull hike

• OPEC cuts output by 500,000 bpd

By Adewale Sanyaolu

Oil prices surged above $100 a barrel on Monday, as ceasefire talks between the U.S. and Iran deadlocked, prompting immediate threats of a U.S. naval blockade on Iranian ports and the Strait of Hormuz.

The oil market had witnessed relief last week when negotiations about a two-week ceasefire heightened, bringing oil prices below $100 per barrel.

As of 2.27pm Nigerian time on Monday, Brent Crude, the international oil price benchmark was trading at $101.90 while U.S. West Texas Intermediate (WTI) jumped roughly 8 per cent to around $104.50.

With this latest development, the Nigerian downstream market is expected to respond with some price adjustments at the depot level.

Checks by Daily Sun on petroleum trading platform: www.petroleumprice.ng, indicated that average depot price remained at N1,210/litre with the highest price selling at N1235/litre.

Some of the marketers at the Apapa depot who spoke to Daily Sun in separate interviews expressed concern over the inability of the US and Iran to reach an accord at the weekend.

They worried that Monday crude oil price of over $100 per barrel is likely to impact on petrol and diesel prices in the days ahead.

Meanwhile, OPEC has lowered its world oil demand forecast for the second quarter by 500,000 barrels per day, citing the economic impact of the ongoing war in the Middle East.

Global oil demand is now projected to average 105.07 million bpd for the second quarter, down from the 105.57 million bpd

previously estimated in March. Downward revisions were applied to both OECD and non-OECD countries. However, OPEC has reiterated its forecast that global oil demand growth for the current year will clock in at 1.38 million bpd.

OPEC’s lower demand outlook comes at a time when the group’s oil production has collapsed due to the ongoing war. OPEC’s crude oil production plunged by a record 7.56 million barrels per day (bpd) in March to just 22 million bpd, good for a 25 per cent decline.

The crash was mainly triggered by the closure of the Strait of Hormuz, one of the world’s most important maritime chokepoints, typically handling approximately 20 per cent of global supply. Iraq recorded the group’s steepest decline, with production falling by 2.76 million bpd to average just 1.63 million bpd. Saudi Arabia production dropped by 2.07 million bpd to 8.36 million bpd, though some losses were mitigated by alternative pipelines including the East-West pipeline. Meanwhile, UAE output fell by 1.44 million bpd to 2.16 million bpd.