Brent crude futures rose $1.48 or 1.9 percent to $81.96 a barrel by 2.pm Nigerian time on Monday, hitting the highest level since August 27 2023 at $81.49, indicating that Nigeria’s 2025 budget assumptions of an average price of $75 may be realistic and could improve revenue projections.
“The rise in oil price will increase Nigeria’s GDP, which translates to economic growth. In addition to this, there will be an upward movement in the country’s foreign exchange reserves,” Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, said.
Data show the global oil market is on the high alert as Brent crude prices face upward pressure, potentially reaching $90 per barrel.
This potential surge is driven by new US sanctions targeting Russia’s oil industry and concerns about a decline in Iranian oil production.
Goldman Sachs has forecast that Brent crude prices could exceed $85 per barrel in the near term, with further increases possible if the reduction in Russian production coincides with a simultaneous decrease in Iranian output.
Impact of US Sanctions on Russian Oil Exports
The United States has enacted its most extensive sanctions package yet against Russia’s oil and gas sector. This move, announced by President Joe Biden, aims to reduce Moscow’s revenue streams while strengthening the position of Ukraine in negotiations.
The sanctions target Russian oil producers and vessels, which collectively transported an estimated 1.7 million barrels per day in 2024, accounting for 25 percent of the country’s total crude oil exports.
“There are genuine fears in the market about supply disruption. The worst-case scenario for Russian oil is looking like it could be a realistic scenario,” said Tamas Varga, PVM analyst. “But it’s unclear what will happen when Donald Trump takes office next Monday.”
Varga added, “The sanctions include a wind-down period until March 12, so there may not be major disruptions yet.”
Expectations of tighter supplies have also pushed Brent and WTI monthly spreads to their widest backwardation since the third quarter of 2024. Backwardation is a market structure in which prompt prices are higher than those for future months, indicating tight supply.
RBC Capital Markets analysts said the doubling of tankers sanctioned for moving Russian barrels could be a major logistical problem affecting crude flows.
Expectations of tighter supplies have also pushed Brent and WTI monthly spreads to their widest backwardation since the third quarter of 2024. Backwardation is a market structure in which prompt prices are higher than those for future months, indicating tight supply.
