Soaring oil prices worry OPEC boss
By Chuks Isiwu,
Energy Editor, Lagos
with
agency report
The current surge in oil prices, which is just under
$50 per barrel, is a source of worry to members of the Organisation of
Petroleum Exporting Countries (OPEC), according to the organisation’s
President Purnomo Yusgiantoro.
Yusgiantoro, who is also Indonesian oil minister,
said in Jakarta, Indonesia, that he was concerned with the rising global oil
prices, but noted that the cartel had not yet seen a cost-driven increase in
inflation.
Nigeria, which predicated its budget for this year on
a $23 per barrel price, is believed to be reaping about $24 extra on every
barrel of oil it sold at the international oil market.
The OPEC president, while responding to questions by
reporters, requiring him to comment on the surging US light crude price, which
was close to $50, said: "I am concerned to see oil prices continuing to
increase. But at the moment, we have not seen cost-pushed inflation" due
to the high oil price.
He, however, said OPEC would wait until its regular
meeting next month in Vienna, Austria, before making any moves. US light crude
for September, which expired last Friday, rose 28 cents to $48.98 a barrel that
day, the highest in the 21 years that oil futures have traded on the New York
Mercantile Exchange, after jumping three per cent on Thursday.
London Brent crude also surged to a record $44.50 a
barrel, up 17 cents.
Purnomo said the OPEC ministerial monitoring
sub-committee will meet on September 13, this year, while oil ministers of the
organisation will meet the following day. A gathering between OPEC members with
other oil producers will then be held on September 15, he added.
"We are going to hear from them about the
current developments and then, we expect we could sort out the problem,"
Purnomo said, as he added: "We expect significant results from the OPEC
meeting."
Having hit $48, oil industry experts believe prices
could touch $50 before any substantial retreat. Head of Australia’s
biggest oil company, Phil Aiken, holds this view and he said: “Demand for
oil is higher than what’s coming on the market in the short
term…We’d feel fairly confident that oil prices will stay up, but I
don’t think they’ll stay at the current level long term. I think
$50 oil could be tested very soon”.
Nigeria projected, in its budget for this year, an income of N1.445
trillion (about $10.2 billion) from crude oil export, based on a $23 per barrel
benchmark price for oil on the international market and an export volume of
about two million barrels per day. The meaning of this is that based on the
latest price, the country is earning over $24 on every barrel of crude sold by
it on the international market.
With the two million barrels per day export volume,
the country would therefore be earning as much as $48 million (about N6.72 billion) extra income per
day. In a month, this would mean an extra income of $1.44 billion (N194.4 billion) above the budget
projection. If this trend continues over six months period, this would
translate to over $ 8.64 billion (N1.16 trillion) extra income while in a year,
it would amount to over $17.28 billion (N2.332 trillion). Finance Minister, Dr. Ngozi
Okonjo-Iweala, has admited that earnings from crude oil sales had been
enormous, infact, much more than projected. The minister disclosed recently
that the government earned over N234 billion as extra oil revenue in the first
six months of this year.
Additional income is also reported to have been
coming to the nation, as a result of the current OPEC policy, requiring members
to pump more oil into the market, as a means of taming the soaring oil prices.
Under this arrangement, Nigeria, as one of the OPEC members, is believed to be
producing in excess of two million barrels per day that should assure it added
income.
