A financial analyst and public finance expert, Mr Steve Nwachukwu, has stated that rising crude oil prices, driven by the ongoing crisis in the Middle East, will continue to impact global fuel prices, especially in Nigeria.
During a radio program monitored by the Nigerian Tribune on Monday in Abuja, Nwachukwu warned that crude oil prices could reach an unprecedented high of $220 per barrel due to the US-Iran conflict, and potentially even higher if the situation persists.
He noted that this would have devastating effects on Nigerians.
Nwachukwu further explained that the situation could worsen if the Strait of Hormuz, which is under Iranian control, is completely closed. Such a closure would disrupt the flow of oil and hinder tankers and oil vessels from transporting crude oil to various parts of the world.
He added that if the Strait were to be permanently closed, there is a significant risk that refineries around the globe would run out of stock, leading to a surge in crude oil prices.
He said, “The truth is that the primary determinant of this very byproduct of crude petroleum is the crude. Whatever the situation, the international selling price of crude will determining where we are heading. If the crisis or conflict in the Middle East continues to escalate, we expect the crude oil to even touch over a $100 to $110 to $220 per barrel.
“But if anything makes it and the crisis or conflict reduces, one has to also say that this issue will abate a bit in our nation and other nations across the world. So, the primary determinant is the rising cost of crude. Wherever it heads, the direction the crude heads, determines what will be the fate of Nigerians in couple of days or weeks ahead.”
He added, “The truth is I don’t know how long and how verified the claim of the absolute closure or is it is for a selected few vessels and tanker vessels to pass through. Because I know that China is also putting a lot of pressure on the Iran government to make sure that they allow the flow of energy, gas and crude oil to flow along that Strait. If we had a 100% closure, it’s within weeks that some of these refineries will start running out of stock and we’ll see the price even hitting above what we expected.
“But if there’s pressure on Iran to continue to allow the flow of tanker vessels or to allow vessels and tank oil to flow along the Strait of Hormuz, it means that it will be as what we think. We pray that there won’t be a total closure but if there’s a total closure, it’s a matter of weeks and the refineries will run out of stock.”
Nwachukwu added that until the Petroleum Industrial Act (PIA) is amended to accommodate 5% or 10% local production for Nigerians, the citizens will continue to bear the brunt of the ongoing conflict or any similar conflicts in the future. He said Nigeria’s dead refineries have made the country very vulnerable adding that Dangote Refinery has not given Nigeria any immunity to global oil shock for now.
“Let’s be honest, we cannot be immune to global oil cost or shocks until we decide to develop a local, Nigerian and an internal model that benefits the millions of Nigerians. Not subjecting Nigerians to the best international practice in the case of the cost of this very crude selling at an international price. Unless we move away from such and have a legislation, repeal or reenactment of the Petroleum Industrial Act (PIA) to make a provision that let’s say 5% of crude oil production or 10% is subject to local population not subject to the international selling price. So you can say Dangote Refinery refine this 10% for the local economy not subjecting the price to the international selling price of crude.
“Otherwise as the crude continues to fluctuate in prices so will the price of this very byproduct continue to punish Nigerians. So, until we look inwards, that is the only way we can have the move against this global shock of the selling price of crude. Like I said, until we have legislation that provides a local model for the local economy, we’ll not be immune from this very fluctuation and the shocks arising from this conflict,” he concluded.