Russia’s ongoing onslaught on neighbouring Ukraine has raised targeted sanctions on its energy exports as the US and some of its European allies move to cut oil imports. Russia is the 3rd largest player in the global oil market, accounting for about 12 per cent of global oil export supply and serving as one of the dominant forces in the global commodity market. Only a few countries would have the ability to boost their production to replace Russia’s.
Asides from its sweet crude oil and natural gas exports, Russia plays a significant role in the global supply of essential raw materials including wheat, grains, coal, gold, nickel, palladium and copper, particularly to the Asian, European and African continents. The Putin-led jurisdiction stands as the world’s largest wheat exporter to Africa, the Middle East and other regions. This highlights its importance in the global commodity, manufacturing and automobile industries.
Similarly, Nigeria is Africa’s largest oil producer with the largest natural gas reserves and one of the continent’s biggest commodity exporters. The country ranks as the 50th largest export economy globally with India, Spain, the United States, France, and South Africa among its top 5 export destinations. Some of its export commodities include cocoa and rubber. Asides from crude oil, key sectors like agriculture, trade, telecommunications, manufacturing and entertainment contribute to growth in revenue generation. However, Nigeria is unable to realize the full potential of its natural resources, particularly crude oil, due to a number of economic, infrastructural, and governmental gaps. These factors, along with a slew of others, have hampered the country’s ability to capitalize on the global opportunities presented by the ongoing Russia-Ukraine conflict.
For instance, Russia can deliver over 10 million bpd of oil to the global market compared to Nigeria which could only export 1.31 million bpd as of December 2021. The European country can refine its oil, but Nigeria cannot, forcing it to buy refined oil products from the countries it supplied with crude oil.
On Tuesday, February 8, the United States banned the importation of Russia’s oil. Countries backing sanctions against Russia like the United States and most EU nations consume 4.8 million bpd while those on the other divide China and Belarus consume 2.3 million bpd. These countries are opting for oil from other countries. The US has had to renew bilateral ties with Venezuela to bridge the gap. Although the Nigerian crude oil reserve ranks 16th on the global scale, its dysfunctional refineries limit the chances of tapping the current crude oil prospects as European nations scramble for alternatives to the Russian oil.
