Crude oil prices rose above the $50/barrel mark for the first time in seven months lifted by a weaker dollar after disappointing job data in the U.S. in May and attacks on oil infrastructure in Nigeria capping output from the Africa’s largest oil producers.
Traders said that concerns over the state of the economy in the world biggest economy had cut expectations of a possible interest rates slice in the US hurting the dollar.
Oil prices fell in the last 20 months to touch a record low of $27 per barrel in January from over $100 in mid-2014, hurting export revenue for Africa largest economy and leading to a slowdown in growth.
The only thing holding prices from rising further is the rising supply in the Middle East, particularly in Iran, whose ramped up output has countered supply cuts like those in Nigeria and Libya, Reuters reported.
But even with rising fuel prices on the global market, Nigeria is still not getting the benefits of the surge as militant groups locally continue to attack oil pipelines.
The so called Niger Delta Avengers have been prowling the swamps of Nigeria’s petroleum-rich south for four months, bombing pipelines and diving underwater to destroy equipment, The Wall Street Journal reported.
The militants, who say oil firms are responsible for pollution and the poor swampland region not benefiting from its reserves, have vowed to reduce Nigeria’s oil output to zero and has intensified attacks on the infrastructure over the last few weeks, Reuters reported.
Unconfirmed reports indicated that Avengers attacks has brought Nigeria’s oil production to just 800,000 barrels per day, from 2 million.
Analysts say these attacks risk pushing Africa’s largest economy towards recession instead of of the higher crude oil prices helping it recover from the effect of a price slump over the last two years.
Nigeria’s economy shrunk for the first time in over 12 years as low global oil prices hurt revenue for the the West African nation and affected other key sectors including manufacturing, financials and real estate.
The 0.36 percent growth contraction in the first three months of this year, compared to a 2.11 percent rise in the same period last year, has pushed the Nigerian economy closer to recession, Bloomberg reported.
