Oil prices rally as Brent breaks $95 level
Oil surged to a 10-month high on Tuesday as supply cuts from OPEC+ tightened the market, with Saudi Arabia’s energy minister shying away from any change in course.
Global benchmark Brent topped $95 a barrel for the first time since November before paring gains. The tighter market has ignited a flurry of predictions that $100 oil could soon return.
While this comes as good news for energy commodities-dependent economies in Africa like Nigeria, the extended powerful rally may rekindle inflation, according to analysts.
Nigeria's economy relies heavily on the oil sector, contributing around 80% of the Federal Government's revenue and 90% of export earnings. While increasing oil prices bring positive outcomes, such as elevated revenue and economic growth, they also come with a downside: exacerbating inflation. Africa's largest economy and most populous nation benefits from these price hikes despite declining production levels. Nevertheless, the nation's overreliance on this volatile commodity raises concerns about its economic stability in the face of fluctuating global oil prices.