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Oil price hits $80 on Iran concerns

International oil benchmark, Brent crude, climbed above $80 per barrel on Thursday for the first time since November 2014, on the back of concerns that Iranian exports could fall because of renewed sanctions by the United States.

Brent, against which Nigeria’s crude oil is priced, reached an intraday high of $80.33 per barrel before receding to $80.16 by 11:09 am EDT (1509 GMT), according to Reuters. It stood at $79.39 as of 8:20 pm Nigerian time.

The rise in oil prices means further accretion to the nation’s Excess Crude Account, into which the difference between the market price of crude oil and the budget benchmark is saved to provide a cushion when oil prices fall or extra cash is needed for spending on infrastructure.

Following the rally in crude oil prices, the National Assembly increased the oil benchmark price for the 2018 budget to $51 per barrel from $45 proposed by the Executive.

“We are going to have reduced supplies from Iran in six months and Venezuela hasn’t shown that they can stop the drop in their supplies,” said the Vice President of Research at Tradition Energy, Gene McGillian.

The US West Texas Intermediate crude rose by 41 cents at $71.90 after also hitting its highest since November 2014, at $72.30 per barrel.

US President Donald Trump’s decision this month to withdraw from an international nuclear deal with Iran and revive sanctions that could limit crude exports from OPEC’s third-largest producer has boosted oil prices.

France’s Total warned on Wednesday that it might abandon a multibillion dollar gas project in Iran if it could not secure a waiver from US sanctions, casting further doubt on European-led efforts to salvage the nuclear deal.

“The geopolitical noise and escalation fears are here to stay. Supply concerns are top of mind after the United States left the Iran nuclear deal,” said Norbert Rücker, head of macro and commodity research at Swiss bank, Julius Baer.