Waiver or no-waiver: What’s next for crude oil prices?


So far in 2019, benchmark oil price (Brent) has soared 38.5% YTD, largely driven by supply shortfalls. Recently, the focus has been on the likelihood of U.S renewal or otherwise of waivers granted to importers of Iranian oil, set to expire on May 2nd, 2019. True to its threat, the U.S has signalled that it would let the waivers expire, with an intention to drive down Iranian oil export to zero.

Looking ahead, with an expectation for lower Iranian oil export, coupled with a continued freefall in Venezuela, ongoing instability in Libya and potential increase in demand that could trail the off-take of the new International Maritime Organization (IMO) emission standard, OPEC+ is unlikely to consider further supply cut going into H2-19 (considering that Iran was the 4th largest OPEC producer in Q1-19). Thus, we believe OPEC+ would either maintain status quo or ease production at its upcoming Jun-19 meeting. However, the disparity in economic reality in Russia and Saudi Arabia is a major factor to watch in the next meeting as Russia’s budget benchmark for crude price stands at c. $40/b leaving room for increased production while Saudi Arabia supposedly needs oil price at c.$80/b to balance its budget.


Overall, for Nigeria, the foregoing phenomenon signals volatility and re-iterates the need to attract investment to the sector, ramp-up production capacity and in the long run wean the domestic economy of the vagaries of the oil market.

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