Oil prices held steady above $102 per barrel on Friday, October 2, as recovering Middle Eastern supplies competed with fears of renewed military conflict and restrictions on fuel exports. Brent crude traded at $102.28 by 4:50 am Nigerian time, down three cents, while US West Texas Intermediate stood at $92.68, down 19 cents. These intraday prices were reported by Reuters.
The steady opening followed a sharp reversal on Thursday, when Brent's December contract finished at $102.31, gaining $4.28, or 4.37%. WTI closed at $92.87, up 2.71%. The price movements reflect the complexities of the global oil market, influenced by various factors including supply and demand dynamics.
Chinese refiners have suspended fuel exports to most destinations, adding to the uncertainty in the market. According to Reuters, PetroChina cancelled some planned petrol and jet-fuel cargoes, citing four people briefed on the matter. It is unclear if export permission will resume after China's holiday ends on October 7.
The restriction concerns refined fuels, rather than a halt to Chinese crude imports. Meanwhile, military developments have added another source of uncertainty, with the Wall Street Journal reporting an additional US aircraft carrier deployment and up to 10,000 more troops heading to the Middle East. This has raised concerns about potential threats to energy supplies.
Despite improvements in physical shipments, concerns about energy supplies persist. Saudi Arabia resumed tanker loadings at Yanbu on Tuesday after restarting its East-West Pipeline, according to Reuters. However, the impact of this development on the market remains to be seen.
For Nigerian fuel buyers, the situation illustrates why watching crude prices alone can give an incomplete picture of costs. Crude must first be refined into petrol, diesel, and other usable products. More crude reaching the market cannot immediately replace finished fuel withheld by exporters or production lost at refineries.
The implication for Nigeria is a risk to replacement costs, not proof that filling stations have already raised prices. Establishing a local increase requires fresh refinery, depot, and retail quotations, alongside the exchange rate used to finance supplies. For businesses budgeting for transport or generator fuel, the useful numbers to follow are the prices suppliers actually quote for the next delivery, as well as the price of Brent.
Key points
- Oil prices remain steady above $102 per barrel due to restrictions on fuel exports and concerns over renewed military conflicts.
- Chinese refiners have suspended fuel exports to most destinations, adding to the uncertainty in the market.
- The situation poses a risk to replacement costs for Nigerian fuel buyers, who must consider factors beyond crude prices.
