If Nigerias oil production stopped?

What would be the knock on affect of the prices of things if hypothetically Nigeria stopped producing oil.

It produces 2.62% of the worlds oil at the moment.

I only ask because i have very little understanding of oil and hope to get a more informed opinion.

Look at the percentage you quoted....what would a 2.6% drop in availability do?
Not a helluva lot...ten bucks a BBL maybe....

a reply to: stirling

What would be considered a bad drop 5% 10% ?

Oops..sorry

originally posted by: Hoosierdaddy71
Opec doesn't need to much of an excuse to raise prices...

a reply to: joho99

If Nigeria stopped producing oil, then it would be just one of a thousand reasons to stop using the blasted stuff to run cars and power plants, and FORCE the governments of the world to spend the majority of the money they have over after paying for hospitals, doctors, police and such, on actually forcing through new energy initiatives designed to fully replace the fossil market.

a reply to: TrueBrit

I get that.
Just i am interested in the initial effects.
What drop would it take to affect normal people.

originally posted by: joho99
a reply to: TrueBrit

I get that.
Just i am interested in the initial effects.
What drop would it take to affect normal people.

That would depend on the current price and how much more the other oil produciing nations would increase production. What it comes down to is other states would increase the production to keep the prices at a certain level. Not to high because people thet creates long term loss of your cutomer base who will move to electric cars ect. and not to low so that they see a large dent in profits. So in other words thier is no easy answer.

a reply to: joho99

Most of the normal people I know, either do not drive because they cannot afford it, or only drive their cars when they absolutely have to, because the fuel cost is too damned high.

I am only learning to drive, because our business requires that I do so. If it were not for the sort of business I work in (call out locksmith, as well as retailing hardware) then I would not be learning at all!

At the rate your avatar consumes alchohol I would not want you driving either..............On the other hand its ok to drive home if you close one eye....
I don't think Nigerias oil production would seriously dent the world supply.....should it cease anytime soon.....

The price of oil isn't determined by the laws of supply and demand.

It is a speculators game; filled with lies, corruption, insider trading and obscene profits for those few in the "know"

Any stories of scarcity will drive up the price of oil and gas at the pump; true or not.

a reply to: olaru12

The price is not affected by supply and demand.

It is affected by the valuised products made from the first refined quart in a barrel.

And that is a good thing.

The profit on producing African oil and selling it locally is larger than other places due to the low shipping costs.

Some companies including BP, Cisco and CitiBank report that southern Africa is 75% of their developing market profits in an article in The Oklahoman.

Well, looking back at history, the 1979 oil crisis resulted in a drop of only 4% of total supply but prices rose from $15.85/bbl to $39.50/bbl, a 149% increase. So a drop of 2.62% in magnitude would have a significant impact on prices. Key factors to consider, however when comparing 1979 to 2014:

1. Virtually everything is much more energy efficient than they are now, reducing the economic cost of an oil price spike. Also, reliance on oil for power generation and heating has dropped drastically. (Good)

2. In 1979, developing countries like China and India were far poorer than they are now and consumed a small amount of oil, in fact China exported oil during this timeframe. (Bad+)

3. There were price controls still in place on US oil that were repealed after the crisis to stimulate domestic production. At elevated prices, production of unconventional and marginal sources is profitable (see US shale oil/Canadian tar sands/Venezuelan tar sands). (Good+)

4. The commodities markets are extremely deregulated now; in 1979, there were much stricter regulations that reduced speculation in the markets. Today, they're awash in speculation and derivatives that have produced wild price swings (see natural gas in 2005, oil in 2008) including examples such as Goldman Sachs buying oil and storing it in barges just to drive up the price. (Bad++)

So, overall, I would say the impact will be negative but not as severe as that in 1979, although a spike in price of 50% would not be surprising. Wildcards would be whether Saudi Arabia can increase its production to its theoretical maximum to meet demand (which I doubt) as well as increased oil production from US/Canada, releases from the SPR, and so on. Of course, rationing could be an extreme method of dealing with the situation.

Also note that Nigeria's oil production is already depressed due to the insurgency in the Niger Delta so it's already operating at reduced capacity.