Ukpono Nsima
Drop in US oil supplies pushes Bonny Light to $70 per Barrel
Nigeria’s premium crude, Bonny Light, has climbed to $70 per barrel, up from about $68. The move was sparked by a drop in U.S. distillate inventories, which tightened global fuel markets and nudged crude benchmarks higher.
When American diesel and heating-oil stocks fall, refiners bid up crude; light, sweet grades like Bonny Light tend to benefit first.
The U.S. remains a price-setter in global oil. Weekly inventory data shape traders’ expectations about fuel supply and refining margins. Lower distillate stocks signal stronger demand—or tighter supply, so refiners pay more for suitable crude slates.
Bonny Light’s low sulphur and good yields make it attractive when diesel cracks widen, translating into firmer differentials and headline prices.
Good news, but below Nigeria’s budget mark
At $70, Bonny Light is firmer but still sits below Nigeria’s 2025 budget benchmark of $75 per barrel. That gap matters.
The fiscal plan also assumes 2.06 million barrels per day of production and an exchange rate of ₦1,500 to $1. Hitting those numbers would cushion the sub-$75 price. Missing on volume, or facing a weaker naira, can open a budget hole even if prices are rising.
Production reality check
Nigeria has struggled in recent years with pipeline losses, downtime, and under-investment. A $70 handle supports cash flow, but the real swing factor is reliable, sustained output.
Each prolonged outage or theft-related disruption erodes the benefit of higher prices and undermines the budget math.
Thin inventories tend to amplify price swings. A refinery outage, shipping disruption, or surprise demand spike can push prices around faster than usual. The same dynamic works in reverse if stocks rebuild. For treasury and central bank planners, that means preparing for wider-than-normal price bands in the coming months.
What it means for businesses at home
Marketers and industrial buyers should expect tighter diesel markets and closely monitor freight and power costs tied to gasoil. Upstream service companies gain some breathing space as operators dust off maintenance and infill plans at stronger prices.
Manufacturers remain exposed to energy costs, so efficiency and fuel-switch options (gas where available) matter more.
Source: BusinessElitesAfrica | Read the Full Story…
