Oil price rises to $82 a barrel amid fears of global recession

Oil prices rose on Friday to $82 a barrel amid fears of a global recession. 

Brent crude, the global oil benchmark, climbed 1.29 percent to $82.64 a barrel at 19:30 GMT+1, while US West Texas Intermediate (WTI) crude rose 1.16 percent to $76.60 a barrel.

In January, World Bank had warned that given fragile economic conditions, any new adverse development — such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic or escalating geopolitical tensions — could push the global economy into recession.

So far, the price of the commodity has remained below $100 a barrel in the year.

Bolade Agboola, oil and gas sector analyst at Meristem Securities Limited, told TheCable that the price of the commodity is expected to remain at its current level.

“We are not expecting any drastic upsurge in the near term and even if there would be, neither do we expect crude oil price to cross 100/bbl at any time this year,” she said.

“This is hinged on the expectation of a tight gap between global demand and supply.

“In addition, fears of recession in the global economy are expected to exert pressure on oil demand growth which might keep the price in check.”

The recent oil price is 9 percent above the benchmark in Nigeria’s 2023 budget.

Agboola said the current price presents an opportunity for Nigeria to finance the 2023 budget “as it is above the assumed price of $75/bbl in the 2023 FGN budget”.

However, she said the risk to this opportunity is not being able to attain or surpass the set production volumes for the country.

“In summary, oil prices hovering around $80/bbl would be beneficial if it is supported by higher production volumes,” Agboola said.

So far, Nigeria’s oil production figure has increased steadily from January 2023 to February 2023 (from 1.25 million barrels of oil per day to 1.30 million bpd).

But despite the rise in oil output, the country failed to meet its Organisation of Petroleum Exporting Countries (OPEC) quota of 1.8 million bpd.