By Sunday Elom
The world’s largest crude oil trader, Vitol, has predicted that there might be a drop in oil and gas demand as the price of the commodity continues to rise in the global market.
According to Vitol’s head of Asia, Mike Muller, expensive energy will cause the fall in oil and gas demand. It has been discovered that the continued rise in oil price will affect consumers’ purchasing behaviour.
Speaking with Bloomberg on Monday, Muller said that low consumption of oil and other related commodities by industrial users has been a major cause of the commodity’s high price.
As at Tuesday, crude oil price stood at about $86.48 per barrel as against the $20 per barrel it sold for in March 2020. This therefore indicates an upward recovery in the oil market.
Muller, who said that crude oil has gained 10 percent year-to-date however said that the high price hasn’t gotten to the level where it discourages buyers but predicted that there will be further movement if output tightening continues.
He said that gas “reminds us that people will abstain from buying expensive energy at some point,” although he agreed that “these prices are justified.”
The Vitol executive is a situation being experienced in Nigeria as many Nigerians resorted to use of firewood and charcoal for cooking due to the high price of cooking gas, despite the negative implication of their action on climate change.
He emphasized that concerns should focus on “what point that (high price) affects the oil market.”
Recall that there had been previous media reports of a deadlock between the Nigerian government and labour leaders to settle on implementation of global price in the Nigerian oil market.
Nigerians already resisting expensive petrol price.
The Nigerian government has not reviewed the nation’s fuel price at retail stations since the first quarter (Q1) of 2021, despite an increase in landing cost where it is spending N2.88 billion daily to keep fuel price at N162-N171 per litre.
The defunct Petroleum Product Pricing Regulatory Agency (PPPRA) had raised official pump price to N212.6 per litre on petroleum pricing template report published on its website, but due to a national outrage over the price hike following the circulation of the report on the internet, the agency swiftly denied the increment on its Twitter page.
The global crude oil price which hovered around $62.74 per barrel as at the end of March 2021 has added $23.74 within almost ten months, a market appreciation by 37.83 percent.
But despite the positive recovery of the crude oil price and substantial increase in the landing cost, there have been no corresponding changes at the retail price level by the Nigerian government in order to stop the frequent strike by labour unions.
Be the first to know when we publish an update
