Oil price, on Monday, recorded an upswing to nearly $95 a barrel.
Brent crude rose 0.38 percent to $94.30 a barrel by 11.14 WAT, while US West Texas Intermediate crude increased by 0.29 percent to $90.28.
The increase was said to have been driven by forecasts of a widening supply deficit in the fourth quarter (Q4), after Saudi Arabia and Russia extended cuts until the end of the year.
On September 5, Saudi Arabia and Russia said they would extend voluntary oil cuts to the end of the year.
The two big oil-producing countries had made varying oil production cuts.
In April, Saudi Arabia and some members of the OPEC and its allies, called OPEC+, announced voluntary cuts amounting to 1.66 million bpd.
At the oil cartel’s meeting in June, Saudi Arabi also made another voluntary cut of one million bpd from July.
Additionally, in July, the country extended its voluntary oil output cut of one million bpd until August.
Jide Pratt, an energy expert, told TheCable that the production cuts would exert more pressure on the price of the commodity, leading to an upward trend.
“Due to reduction on production quota from Saudi, which will stay till year end, there will be more pressure on pricing,” he said.
“I won’t be surprised we see almost $100 crude as we approach December.
“Sadly, our local production is not as high as it should be to take advantage of high crude. August production rose marginally but still far from our production quota.”
In August, Nigeria’s oil production increased to 1.18 million barrels per day (bpd) — up from 1.08 million barrels in July.
Pratt said a rise in Brent crude, Nigeria’s oil benchmark, is expected to push up prices in the post-subsidy regime.
On August 15, Ajuri Ngelale, special adviser to President Bola Tinubu on media and publicity, said his principal promised there would be no further increase in the petrol pump price.
The Nigerian National Petroleum Company (NNPC) Limited had also said there are no plans to hike pump prices despite the rise in crude oil prices, landing cost, and fall in the value of the naira.
TheCable had reported that President Bola Tinubu was considering a “temporary subsidy” on petrol over a surge in crude oil prices and foreign exchange rates.