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Oil Demand Can be Lifted with Soaring Natural Gas Prices

The present Natural Gas scarcity and price increases on the gas markets could be a windfall to OPEC, which expects more demand for other fuels at a time of year when gas prices in Europe and Asia are at all-time highs. In addition, Nigeria, Africa’s top oil producer, and exporter, see rising gas prices affecting oil prices because consumers will be forced to seek fuels other than Natural Gas this winter, according to Mele Kyari, managing director of the Nigerian National Petroleum Corporation (NNPC), in an interview with Bloomberg Television on Wednesday.

The gas issue could boost oil demand by as much as 1 million barrels per day (BPD), according to Kyari, who also predicted that oil prices would rise by roughly $10 per barrel in the next three to six months as a result of the gas shortage. Iraq, OPEC’s second-largest oil producer after Saudi Arabia, believes crude demand will climb due to the gas shortfall, according to Iraqi Oil Minister Ihsan Abdul Jabbar Ismaael. Higher oil demand will be great news for OPEC, which plans to loosen its cuts by 400,000 barrels per day (BPD) each month until the entire collective stake is unwound next year.

Before the European gas crisis, analysts worried that OPEC would maintain its monthly market contributions. A colder winter and rising Natural Gas costs around the world, according to Goldman Sachs, could lead to higher-than-expected oil prices at the end of the year, with oil hitting $85 per barrel possible in the fourth quarter. Oil prices were up more than 1% early Wednesday, with Brent Crude trading above $75.

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