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Nigeria oil margins hit $37 a barrel as Brent Crude sell for $85 a barrel

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Nigerian oil margins per barrel increased slightly in London trade on Monday, continuing the upward trend that began last week when prices surged by almost 4% on the belief that supply was contracting and the possibility of additional attacks on Russian energy infrastructure was raising concerns

At the time of drafting this report, the May delivery of Brent crude oil futures increased by 40 basis points to $85.66 a barrel. The April contract for U.S. West Texas Intermediate was up 0.5 percent at $85.74 per barrel on trade.

The capital and operating costs associated with producing Nigerian crude have risen steadily, hitting previously unheard-of heights of more than $48 per barrel.

The government can only share $37 per barrel of crude oil with oil companies since it sold at roughly those prices on the global market.

Nigeria has one of the greatest costs of oil production in the world when compared to $9 in Saudi Arabia, $21 in Norway, or $24 for US shale oil.

A concerted effort to crack down on targeted attacks and organized theft rings has led to Nigeria’s oil production reaching its highest level in more than three years despite the country’s widespread problems with theft and sabotage

A detailed analysis of the murky and intricate trade in stolen Nigerian oil, valued at $3 billion to $8 billion annually, by Chatham House

Africa’s leading oil producer’s output reached a decades-low in the second half of 2022, falling below 1 million barrels per day, and then rebounded to 1.476 million barrels per day in February 2024, according to OPEC data

Nigeria has continuously fallen short of the OPEC+ agreement’s production quota. Nigeria proposed an audacious daily crude oil production of 1.78 million barrels in its 2024 budget while OPEC pegged its production at 1.5 million barrels per day.

Oil theft and pipeline vandalism have long been problems for Nigeria’s upstream oil and gas sector, forcing majors to leave the nation and frequently leading to force majeure at the country’s main export terminals for crude oil. Nigeria produces a little less oil than it can, by about a million barrels per day.

Over 6,000 illicit refineries that processed stolen crude have been demolished by state energy company NNPC Limited thus far.

Private security companies were hired by the Federal government to support military efforts to guard facilities as part of an aggressive and more effective strategy to combat theft and pipeline sabotage

Despite a decline on Friday, both benchmark oil contracts posted gains for the previous week. For most of the past month, oil prices have been rangebound, but on Thursday, the International Energy Agency released a bullish demand report that caused prices to rise to their highest point since November.

The Houthi attacks in the Red Sea forced fuel and crude carriers to reroute, lowering the amount of oil available to users. This was the fourth time since November that the agency strengthened its demand outlook.

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