As I wrote in last weekend’s roundup, there
is a lot of uncertainty looming in Nigeria that could impact the global oil
market. A weeklong row between the government and labor unions over the
government’s fuel subsidy cost Nigeria about
$1.3 billion dollars. Labor unions suspended the strike early last week
after Nigerian President Goodluck Johnson agreed to partially reinstate his
government’s fuel subsidy.
Despite the brief respite from political turmoil, the
country was rocked by a series of bombings throughout the week that reportedly
left 256 dead. “The
militant Muslim group Boko Haram, which is fighting for rule by Islamic law in
the north, said it was responsible for blasts at eight government buildings in
Kano on Jan. 20,” according to Businessweek.
The same report said that:
The attacks by Boko Haram haven’t
affected oil from Nigeria’s Atlantic coast, where companies including Royal
Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA pump
more than 90 percent of the country’s crude output. Similarly, the financial
markets in the southwestern commercial capital, Lagos, haven’t been disrupted
by the violence.
Nevertheless, Nigeria’s instability may have long-term
implications for the global oil market if violence affects the country’s oil
sector. Already, “Brent
oil for March settlement advanced as much as 59 cents, or 0.5 percent, to
$110.45 a barrel on the London-based ICE Futures Europe exchange,” according
Energy analysts will need to be watchful of developments in
Nigeria as the government continues to grapple with unrest. Moreover, the fuel subsidy
issue may again surface as a point of tension if fuel prices rise. According to
a report from The Wall Street Journal,
worry that the [fuel] subsidy cut played into Boko Haram's antigovernment
stance, helping it to channel the anger of Nigeria's young disaffected Muslims.”
Thus, the issue could continue to affect stability in Nigeria.
This Week’s Events
At 9:30 AM today, SAIS will host Energy Information Administration's
(EIA) 2012 Annual Energy Outlook Release. At 10 AM, the U.S.-Japan
Institute will host a Discussion
of Fukushima from a Global Point of View: From the Perspective of Energy
Tuesday at 1 PM, Jonathan Pershing will give a Post-Durban Update at CSIS.
At 9 AM on Wednesday, head to the Wilson Center for a
discussion that will explore the question: Is a
Food Crisis Brewing in the Sahel?
On Thursday, the Environmental Law Institute will host a
discussion at 2 PM on Offshore Oil & Gas
in the Arctic: The Next Five Years.