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Forget Saudi Arabia and Iran: Nigerian Militants Biggest Upside Risk for Global Oil Prices, Says RBC Capital Markets
Forget Saudi Arabia and Iran: RBC Capital Markets points to Nigeria and its militants as a key influence on global oil prices.
Helima Croft, global head of commodity strategy for the company, told CNBC's Power Lunch that troubles in Nigeria pose the biggest upside risk to the oil market, and she pointed out that its output has fallen to the lowest level in decades because of several acts of militant sabotage.
She said, "If Nigeria goes offline, it's sticky: these armed militants are very intent on shutting down production [and] they have the capacity to do so.
"I don't think we should write them off, because they are armed to the teeth."
Business Insider UK analyst Lianna Brinded notes that figures from Nigeria's oil ministry show that militant activity has caused the country's output to fall by 800,000 barrels per day (bpd) to 1.4 million bpd and that this is "below the production level of Angola, which held steady in April, at 1.8 million bpd."
The situation isn't about to improve for the African nation any time soon, either: the Niger Delta Avengers, who are responsible for attacks that have halted major operations in the Niger Delta, have warned all oil companies in the region to shut down and leave within two weeks or face increased attacks.
The group is said to be intent on ending oil well ownership by forces outside of the region; as a result of its most recent attack, reports suggest Royal Dutch Shell was forced to evacuate staff from its Eja OML 79 production facility.
The group says Chevron is its next target and has told the oil giant to cease repairs to a platform and oil flow station damaged by attacks a week ago "until our demands are fully met."
Failure to comply with its orders, it added, will result in further attacks that the Nigerian military would supposedly be incapable of stopping.
Julian Lee, oil strategist for Bloomberg First Word, recently singled out Nigeria as "the prime candidate for disruption" due to the mounting civil unrest and warned that it, plus other factors, could contribute heavily to global oil shock.
