Will oil steady amid supply disruptions?

Oil prices have managed to maintain a steady position in the market despite recent challenges such as supply disruptions in Libya and a smaller-than-expected draw in U.S. crude inventories. The global demand growth continues to be in line with forecasts made earlier in the year, with expectations of increased movement across the world during the summer months. Tensions in the Middle East, particularly in oil-rich regions, have contributed to driving up crude oil prices. Speculations around ongoing conflicts and political uncertainties have also played a role in keeping oil prices slightly elevated. The recent stabilisation of oil prices in the upper 70s indicates a possible trend in the short to medium term. While there are uncertainties such as Israeli-Iran conversations and U.S. interventions, it is likely that oil prices will remain at the current levels unless extraordinary events occur. OPEC, the oil-producing cartel, is closely monitoring market developments and is expected to maintain its strategy of limiting oil output to support higher prices. The cartel is likely to continue moderating supply to control market pricing for the remainder of the year. Domestically, the Nigerian National Petroleum Company (NNPCL) is aiming to achieve a production target of two million barrels per day by the end of the year. However, recent reports of illegal oil refining sites being uncovered pose challenges to this goal. Despite the discovery of 72 illegal refineries in just six days, there are ongoing issues with leakages and theft in the industry. Achieving the production target may require significant investment and concerted efforts to address these challenges. The persistent fuel scarcity in Nigeria remains a concern, with discussions around subsidies, the Dangote refinery, and the government's crude oil sales in Naira. The entry of the Dangote refinery into the market is expected to introduce competition and potentially moderate fuel prices. Regulatory decisions regarding importation, subsidies, and pricing will play a critical role in shaping the oil market dynamics in Nigeria. Overall, the oil industry faces a mix of opportunities and challenges, both globally and domestically, which will require strategic decisions and collaborative efforts to navigate effectively.