Oil prices fall on Middle East tensions

Geopolitical tensions in the Middle East have sent shockwaves through the oil markets as investors grapple with the uncertainty surrounding potential escalations between Iran and Israel. The recent attack by Iran on Israel has given rise to concerns about retaliatory actions and their impact on oil prices. Additionally, Nigeria's challenges with crude oil production due to pipeline issues and maintenance activities have added to the complexities of the global oil landscape. Kola Karim, Chairman of Shoreline Group, shared his insights on these critical issues in a recent interview. Karim highlighted the significance of Iran's qualified retaliation towards Israel, noting that the current phase has concluded, providing a momentary sense of stability in the oil market. However, the looming possibility of severe Israeli retaliation poses a significant risk of disruption in the region, leading to potential fluctuations in oil prices. He projected oil prices to range between $85 to $95 in the medium term, with long-term stability around $80 amid global demand dynamics. Addressing Nigeria's production challenges, Karim emphasized the need for substantial investments in modernizing above-ground infrastructure to sustain the country's production targets. With aged pipelines and infrastructure posing operational hurdles, Nigeria faces a critical imperative to revamp its systems for long-term viability in the oil market. On the global front, Karim underscored the impact of inflationary pressures on production outlook and the demand-supply equation. He pointed out that factors like stabilization of fiscal economies, resurgence in demand from regions like China and India, and geopolitical tensions involving Russia and Ukraine could influence future oil market dynamics. Furthermore, in the Nigerian context, Karim shed light on the operational realities of Dangote Refinery and its implications for the local market. He emphasized that the refinery, driven by commercial imperatives, needs to operate at competitive prices to ensure effective returns on investment. Karim urged Nigerian authorities to prioritize investments in infrastructure renewal and drilling to ramp up production levels, emphasizing the need to enhance the country's positioning in the global oil landscape. In conclusion, Karim cautioned that without substantial investments in both below-ground and above-ground assets, Nigeria risks losing its status as a leading oil producer in Africa. He stressed the criticality of strategic investments to strengthen Nigeria's competitive edge and ensure its relevance in the evolving oil economy.