Crude oil prices continue to rise in the face of the escalating conflict between Hamas and Israeli Defense Forces as the conflict enters the fourth day. According to the data provided by the Organisation of Petroleum Exporting Countries (OPEC), the OPEC basket price rose from $87.3 per barrel on 6 October 2023, a day before Hamas attacked Israel, to $89.99 a barrel on 9 October 2023.
Brent and West Texas Intermediate (WTI) are also on the rise, prompting speculation about increased volatility in the crude oil market.
The Hamas-Israeli conflict has led to the death of about 2,000 Palestinians and Israelis. Specifically, the BBC reported that the Israeli death toll has crossed over 1,000 with hundreds of other citizens wounded, while the health authorities in Gaza reported that about 900 Palestinians have been killed with many other wounded.
“Oil prices have been buoyed by the Hamas attack on Israel, with a heightened geopolitical risk premium in markets and growing concerns that the U.S. will double efforts to stem Iranian oil flows. Despite the price rise, uncertainty remains in oil markets as to exactly how supply and demand will be influenced,” Michael Kern, an analyst with OilPrice.com, said.
OPEC projected that the global consumption of crude oil for the third quarter of 2023 would be 102.06 million barrels per day, a marginal increase over 101.26 million barrels per day during the second quarter of this year.
For the last quarter of 2023, the global economy will consume 103.18 million barrels per day, thus bringing the 2023 average annual consumption per day to 102.06 million barrels.
From the above 2023 annual projection, the Organisation of Economic Cooperation and Development (OECD) is expected to consume 46.12 million barrels per day out of which the Americas will demand 25.25 million barrels per day, according to OPEC.
The world’s largest economy, the United States of America (USA), will consume 20.51 million barrels per day out of the 25.25 million barrels per day for the Americas. Europe will consume 13.47 million barrels per day while the OECD Asia Pacific will demand 7.4 million barrels per day.
The second largest economy in the world, China, tops the consumption chart of the non-OECD countries in terms of crude consumption in 2023 with an average daily usage of 15.82 million barrels according to OPEC.
The Middle East will consume 8.64 million barrels per day; India, 5.38 million barrels per day; Africa, 4.57 million barrels per day while Latin America is expected to consume 6.68 million barrels per day.
Saudi Arabia, with 8.97 million barrels per day in August 2023, retained its top spot as the largest crude oil producer among the OPEC member states, based on the data provided through secondary sources by OPEC.
Nigeria produced 1.27 million barrels per day in August to remain Africa’s largest crude oil producer, trailed by Angola which produced 1.12 million barrels per day.
Stakeholders believe Nigeria will not benefit much from the rise in crude oil prices in the short term due to the importation of refined petroleum products. With Dangote Refinery and the Port Harcourt Refinery yet to release refined petroleum products into the market, Nigeria continues to import refined petroleum products from overseas, denying the nation the benefits from the rise in crude oil prices at the international market.
“Even the gains to be derived from the increase in the price of crude oil are substantially eroded due to the high bill for imported petrol and diesel incurred by the government, because of the poor non-working conditions of our local refineries,” Dele Oye, NACCIMA president, said, adding that the reforms implemented by President Tinubu will soon begin to yield fruits to Nigerians.
Dangote Refinery is expected to release its first products into the market any moment from now, while December 2023 has been announced as the commencement date for production at the Port Harcourt Refinery complex.
