Violence during Nigerian Election Season an Upside Risk for Oil Prices

IBI Times

4 April 2011

Violence during Nigerian Election Season an Upside Risk for Oil Prices

Commodities strengthened in European session as no further bad news released so far. Eurozone's PPI grew less than expected in February with the annual reading rising +6.6%, compared with consensus of +6.7%. January's reading was revised lowed to +5.9%. However, this is not likely to shake ECB policymakers' determination curb inflation by curbing interest rates.

While fighting in Libya and tensions in other Arab countries continue, general elections in Nigeria may be a threat to oil supplies. On March 16, the Movement for the Emancipation of the Niger Delta (MENA) bombed an oil facility run by the subsidiary of Italian energy major Eni SpA. The rebel group pledged further action. We believe the market has not yet priced in attacks of oil facilities in Africa's third largest oil producer during election periods. If these really happen, 10% of US' oil imports will be affected and oil prices should set to rise from recent highs.