Oil prices dipped by 2% due to unconfirmed rumors of a truce between Israel and Hamas. This was further compounded by a major U.S. refinery going offline because of a power failure.
Despite a Qatari official’s denial of any ceasefire, it was emphasized that Hamas had shown a positive response to a ceasefire suggestion made earlier in the week.
Brent crude futures experienced a decrease of $1.85, or 2.5%, settling at $78.70 per barrel. Similarly, U.S. West Texas Intermediate crude futures saw a reduction of $2.03, a 2.7% fall to $73.82.
Escalating tensions in the Middle East have driven up oil prices. Continuous assaults by Houthi forces based in Yemen on ships traversing the Red Sea have led to increased expenses and disruptions in worldwide oil trade.
The Houthi faction has declared its plan to persist in targeting U.S. and British warships, framing these actions as self-defensive measures.
OPEC and U.S Interest Rate
OPEC+ put into effect voluntary oil production reductions in November last year, totaling 2.2 million barrels per day (bpd) to bolster oil prices.
Nigeria Remains Unaffected Despite Oil Price Drop
Although the fall in oil prices is noteworthy, it still surpasses the benchmark price of crude oil of $77.96 per barrel as forecasted in the 2024 budget.
This implies that the drop does not pose a threat to Nigeria’s revenue predictions from the oil sector.
OPEC had reduced Nigeria’s production quota for 2024 below the budget’s production target. Nonetheless, sources who spoke to Reuters mentioned that the cartel would convene later in March to consider prolonging these production reductions past the first quarter.