Victor EzejaThere are feelers that the Nigerian government has quietly restored the fuel subsidy removed few months ago as it appears to maintain the price cap of ₦617/per litre even when the prices of crude oil in the international market have surged and was expected to push up the cost.
Oil prices on Tuesday, climbed above $95 a barrel for the first time in 2023.
Global oil benchmark, Brent crude futures went as high as $95.33 a barrel and appears to be on course to challenge $100 a barrel this month, according to a report from Financial Times.
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The US lighter crude, West Texas Intermediate (WTI) increased to $91 a barrel from $67 a barrel earlier.
This price increase was after surging by almost 30 per cent since June, after Russian and Saudi Arabian supply cuts extended, fuelling concerns of a shortfall that could harm the global economy.
Saudi Arabia and Russia announced they were extending their voluntary oil supply cuts, which were originally slated to expire this summer, until the end of the year. Their combined supply cuts amounts to 1.3 million barrels per day.
This is happening at a time of low production of shale oil by the United States.
Nigeria’s petrol subsidy And pomp price fixture
Earlier while responding to the outcry from Nigerians over the unprecedented hike in cost of petrol as a result of subsidy removal, President Bola Tinubu had said that the Federal Government would take steps to prevent the price from climbing higher without going back to subsidy payments. The statement made observers to raise questions about the withdrawal of subsidies on petrol.
The removal of subsidies on the commodity led to price fluctuation, meaning it was no longer regulated or fixed but open to vegaries of the market.
Also, the decision of the Tinubu-led administration to float the Naira in the foreign exchange market, led to further depreciation of the currency’s value, currently reaching as high as ₦773.98/$1 in the official exchange rate window and ₦965 in the back market.
Petroleum marketers had said that because the country was not producing locally, but rely on imports, more than 80 per cent of the cost is determined by the price of crude oil in the international market and the value of the dollar which importers require to bring in the product.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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