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Who are the winners and losers from Saudi drone attacks? Read the implication for Nigeria

Drone attacks on key Saudi oil facilities have halved crude output from OPEC’s biggest exporter, catapulting oil prices by the largest amount since the first Gulf War.

The crisis has focused minds on unrest in the crude-rich Middle East, with Tehran denying Washington’s charge that it was responsible.

Brent oil prices leapt 20 percent on Monday to chalk up the biggest intra-day daily gain since 1991.

Saudi Arabia the biggest loser?

Saturday’s attacks on national energy giant Saudi Aramco’s Abqaiq processing plant and Khurais oil field knocked 5.7 million barrels per day off production, more than half of its total output.

Riyadh, which depends its oil sector to lift revenues, is de-facto leader of the 14-nation Organization of the Petroleum Exporting Countries (OPEC).

Soaring world oil prices traditionally boost the coffers of OPEC nations — but most experts contend that Saudi will likely not benefit this time.

“If oil prices remain high, and especially if they keep rising, this is most likely to be due to sustained disruption to Saudi production — so they won’t be in any position to benefit,” independent economist Julian Jessop told AFP.

Saudi authorities are meanwhile considering whether to delay an initial public offer of Aramco shares, according to people familiar with the matter. This could lead to a dampening if the growth forecast

United States the biggest winner?

The United States should reap the benefits due to its status as the world’s biggest oil producer on booming shale oil.

“This means that the US shale industry will directly benefit … and it will be interesting to see how quickly additional barrels can be brought onto the market from the US,” said JBC Energy analysts.

“However, this question is — at least for the next couple of months — less one of actual production, but much more one of logistics.

“We would expect a surge in US crude exports over coming months.”

In order to cushion the market impact, US President Donald Trump on Sunday authorised the release of oil from US strategic reserves.


Tehran, which has already been slapped by US sanctions, stands accused by Washington of being behind the attacks.

Trump has already threatened action against the Islamic republic, warning that the US was “locked and loaded” to respond.

Iran should expect more sanctions and global alienation. Squeezed revenues, possible economic crisis and weaker negotiations leverage.

World economy

The global economy, which is suffering from a sharp slowdown amid the China-US trade war, is likely to take a hit from soaring oil prices, analysts say.

The commodity is regarded as a key barometer of growth because it greases the wheels of the world economy and is vital to most economic activity.

Runaway oil prices meanwhile feed through into higher consumer prices and risk stagflation, whereby they suppress growth yet fuel inflation.

Again growing tensions in the Middle East are another headwind for the global economy in already uncertain times, and a full-blown conflict could trigger another leg in the global downturn.

Blow for China

China, which remains entangled with the United States in a trade war, is also expected to suffer due to its oil-dependent and energy-hungry economy.

The Asian powerhouse, whose growth is faltering, is also struggling with spiking inflation and a badly performing manufacturing sector.

Yet oil demand is already waning in the face of weaker growth.


Economists at Wanbaba Consult see the almost 20% spike in global oil price in the short term as a positive for Nigeria. Especially as Nigeria looks for ways to fund it’s almost N2Trillion budget deficit. This is possibly a short term reprieve.

We expect higher demand for oil in the near term due to global precautionary reactions. Hence increased activity and revenues in th oil and gas sector.

It is also estimated that there would be a significant accretion to the reserve with its implication in stability in the foreign exchange market and periodic intervention by the CBN.

The balance of payment position would be positively impacted month on month.

While the GDP figures for Q3 could witness a marginal increase even in the face of a delay in budget implementation slow capital releases necessary to fund capital projects.

Hopefully if the Saudi situation isn’t restored to normalcy within weeks, the rising oil prices could postpone the rumored evil day of another round of currency devaluation.

Wanbaba Consult also sees an implication for the budget implementation especially the funding of recurrent expenditure such as civil servant salaries that has been an object of series of back and forth debates. This is because Nigeria is known for spending as the receive. Therefore we do not see an immediate accretion to the sovereign wealth fund.

No spike in inflation is envisaged. Wanbaba expects key interest rate – MPR to remain constant.