Oil traders have eye on nigeria following election and regime change
Former military ruler Muhammadu Buhari’s victory in Nigeria’s presidential election will likely mean that financial aid will dry up for militants in the country’s oil region, where groups have shut in as much as one-third of production in previous years.
As a result, RBC Capital Markets is warning investors not to dismiss the threats made by groups such as Movement for the Emancipation of the Niger Delta (MEND) to cripple Nigerian oil output if incumbent Goodluck Jonathan was defeated. Mr. Jonathan lost the election by more than 2.5 million votes.
RBC’s global head of commodity strategy, Helima Croft, believes Government Ekpenmupolo, the former head of MEND, could be particularly dangerous. He received some of the most lucrative government contracts and retains a large arsenal of weapons, including a warship, according to local media reports. “Given the high financial stakes for these individuals and their proven track record of taking down production, their threats cannot be entirely dismissed,” Ms. Croft said in a report.
Mr. Jonathan, who received strong support from Nigeria’s oil region, redirected significant amounts of government patronage to power brokers in the Niger Delta. However, Ms. Croft noted that former militants stand to lose lucrative contracts and face prosecution for oil theft when Mr. Buhari takes office, particularly since the government faces financial stress due to falling oil prices.
“Hence, they could prove to be dangerous spoilers over the coming days,” the strategist said. “It will be important to watch events in the Niger Delta over the next few weeks as Jonathan’s defeat raises the risk of a return to production shut-ins.”