Africa’s leading oil producer and exporter, Nigeria, sees the rise in gas prices being shifted to oil prices as consumers will be forced to look for alternative fuels to natural gas this winter, said Mele Kyari, director manager of the Nigerian National Petroleum Corporation (NNPC), in an interview with Bloomberg Television.
Oil demand could rise by as much as a million barrels per day (bpd) due to the gas crisis, according to Kyari, adding that gas shortages could drive oil prices up by about $ 10 a barrel over the next three to six months.
Rising demand for oil will be good news for the Organization of the Petroleum Exporting Countries (OPEC), which aims to smooth its cuts by 400,000 bpd each month until it gets rid of all of the collective cut sometime next year. Before the gas crisis hit Europe, analysts doubted that OPEC could stay on course with monthly additions to the market, in light of the resurgence of COVID in recent months.
Earlier this week, Goldman Sachs said a colder winter and rising natural gas prices globally could cause oil prices to be higher than anticipated later this year, with the possibility that oil reaches $ 85 a barrel in the fourth quarter.
“The global gas supply shortage creates a clear and potentially significant bullish catalyst for the oil market this winter, outweighing the downside risk to global oil demand from another Delta-like COVID wave,” Goldman Sachs analysts wrote in a note.