EDITORS NOTE: Graphic content / A salvo of rockets is fired by Palestinian militants from Gaza City toward Israel, on October 8, 2023. – The death toll surged to almost 1,000 since Palestinian militant group Hamas launched its massive surprise attack on Israel with a barrage of rockets and a massive ground assault, officials on both sides said on October 8. • States, FG may borrow more, struggle with budget implementation to spend N644.8 billion subsidising Premium Motor Spirit alone monthly.
The war declaration allows the Israeli government to tap into a larger trough of military reserves and also increases the chances of a ground invasion into Gaza. With the dollar already exchanging for over N1,000 at the parallel market while Nigeria’s refineries remained dormant, there are indications that the foreign exchange crisis may worsen as the Nigerian National Petroleum Company Limited may spend the federation’s earnings on importing fuel while other marketers scramble for available dollar to import diesel and aviation fuel.
Nigerian Midstream and Downstream Petroleum Regulatory Authority, in August, said the nation’s petrol consumption dropped by 16.8 per cent in July, 2023 to 52 million litres daily compared to 64.96 million litres recorded in June. This follows an alleged loan of $1.95 billion from the World Bank in the first four months of Tinubu’s administration. The loans are reportedly for education , power , and women empowerment .
Ajibola said the likely increase in the price of crude should have brought some fortunes to Nigeria but the fact that Nigeria imports refined products, the increase in the price would ultimately lead to increased landing cost of refined products. “We will simply spend a longer time in this low economic growth, high unemployment, and high poverty equilibrium. We will simply continue to borrow to take care of our fixation with petrol subsidy,” Adenikinju said.
According to him, the escalating situation in the Middle East would undoubtedly have an effect on oil prices worldwide, but whilst many other countries would make determined and clearly discernible efforts to reduce the impacts on their citizens, Nigeria would, as always, leave the citizens to the fate of market forces.
“However, if the war persists for long, then the price of crude oil may rise but gradually judging from history. The implications on the landing cost of PMS in Nigeria will be significantly more because of forex instability in Nigeria than the volatility in the global oil market.
Source: Energy Industry News (energyindustrynews.net)
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