Oil price is down after a three-day rally in early June that saw oil hitting a 2016 high of $53 per barrel, although this is still a far cry from June 2014, when it stood at $114.
Global disruption in oil production saw the price of oil go from $26 in February to $53 in first week of June before dropping to around $50 this week. This global disruption is mostly due to the upsurge of militant activities in Nigeria’s oil rich Niger-Delta region which forced down Nigeria’s daily oil output to around one million barrels per day. Production in US which saw domestic crude production fall by 250,000 barrels a day in May which is its biggest monthly decline in years was also responsible for the price rally.
This price rally signalled hope to the oil producing nations but Nigeria, Africa’s biggest producer until last year, still couldn’t profit from this hike as it continues to grapple with disruptions to its oil production which has fallen from 2.2m bpd to about 1.6m bpd. Earlier in the week, the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Company (NNPC), said it had lost N60 billion in three months, due to the break in its Forcados pipeline bombed by the NDA. And this is just one out of several the group has attacked in recent times.
Ray of hope
Nigeria’s efforts to restore peace in the troubled Niger-Delta region received a major boost on Monday the 13th of June, as Niger Delta Avengers, the group responsible for most of the renewed hostilities on oil and gas pipelines in the region, for the first time indicated interest to dialogue with the Nigerian government.
A statement by the groups spokesperson Mr. Agbinibo, posted on the Avengers’ website on Monday partly reads: “The high command of the Niger Delta Avengers (NDA) is using this medium to restate that there are no new items to put on the table for dialogue, we only want a genuine attitude and conducive atmosphere that will make us commit to any proposed dialogue and last peace talk.”
It went further: “The NDA high command is restating our commitment to attack the interest of Oil Corporation and international refineries operators that bring in vessels to the Niger delta territory to buy our oil that every successive government have refused to used and reapply the proceeds towards any development in the region since 1958. If they refuse be heed to our advice will result to sinking of two their mother vessel as an examples to others They should not undertake any repair of pipeline, oil and gas facilities that is damaged or attacked by our forces during this period of “Operation Red Economy” until and/or after the dialogue.”
A peaceful Niger-Delta is very important to Africa’s largest economy, as they can earn more revenue from sale of oil. On the other hand, a stable Niger-Delta means more daily output from Nigeria, which will force down oil price as US and Iran hope to ships more barrels per day.