Document summary
The importance of Nigeria’s recent attempt to remove subsidies on domestic oil consumption goes very deep and way beyond Nigeria itself -- indeed, with regard to subsidies on domestic oil consumption, Nigeria is just the tip of the global iceberg. According to the IEA, direct subsidies on crude oil in 2010 amounted to $192bn, with over 70% of this total in the world’s major exporting nations. lobal crude reserves remain plentiful and higher prices have recently spurred new sources of production (e.g. North America and Brazil). But with c.4mbd p.a. of new supply required just to offset natural decline rates, real prices look set to rise further over this decade to incentivize the new capacity required to prevent the frustrated demand for crude growing further in the future.