Emmanuel OchayiOil prices experienced a 2% decline on Thursday, attributed to unverified reports of a possible ceasefire between Israel and Hamas, alongside a major U.S. refinery shutting down due to a power outage.
Despite Qatari officials denying the ceasefire, Hamas allegedly responded positively to a proposal earlier in the week.
Brent crude futures dropped 2.5%, settling at $78.70 per barrel, while U.S. West Texas Intermediate crude futures fell 2.7% to $73.82.
Heightened Middle East tensions, with Houthi attacks in the Red Sea, had previously raised oil prices. The Houthi group confirmed its intent to target U.S. and British warships, citing self-defense.
READ ALSO: OPEC: Nigeria’s Crude Oil Production Soars To 1.4mbpd
OPEC+ implemented voluntary 2.2 million bpd oil production cuts in November to support prices. Oil prices initially rose after Federal Reserve Chair Jerome Powell’s announcement on peak interest rates and anticipated economic growth, factors usually associated with increased oil demand.
However, despite the significant oil price drop, Nigeria remains above its budgeted crude oil benchmark of $77.96 per barrel. This drop does not threaten revenue projections, as it aligns with the projected budget.
OPEC cut Nigeria’s production quota for 2024 below the budget target, but discussions in March may consider extending production cuts beyond Q1.
