The price of Nigeria’s highest revenue earner, crude oil, on Tuesday hit $70.20 a barrel for the first time in two years.

This surge, last seen since May 2019, was on investors’ optimism that improving oil demand and a dwindling supply glut may mean the market can absorb any additional supply from OPEC and its allies.

The new price surge is a mixed grill for Nigeria as it should receive the highest revenues on crude oil but also pay the biggest subsidy on imported refined products.

Brent crude, the international energy benchmark, rose 1.3% to $70.20 a barrel. It is on track for its highest close since May 2019. West Texas Intermediate futures gained 2.2% to $67.78 a barrel. The U.S. gauge crossed its highest level since October 2018 earlier on Tuesday.

Nigeria, Africa’s biggest crude oil exporter, depends largely on proceeds from crude oil to service over 80 per cent of its annual budget. The country is an irony as it still occupies the top spot as the biggest importer of petroleum products in the continent due to poor states of its refineries.

The new price surge is a mixed grill for Nigeria as it should receive the highest revenues on crude oil but also pay the biggest subsidy on imported refined products.

Members of the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, on Tuesday agreed to continue relaxing curbs on oil production, signaling their confidence in improving oil demand and a drop in the global supply glut. Prices began rallying after a technical committee within the cartel on Monday confirmed forecasts for a rebound of six million barrels a day in world oil demand this year, according to people familiar with OPEC and its allies.

Vaccination programs are enabling governments across North America and Europe to reduce coronavirus restrictions and resume more normal economic activity. That will help pare global oil stocks—which at one point last year threatened to overwhelm the world’s ability to store them—to below their five-year average by the end of July for the 2015-19 period, the OPEC committee projected. In the U.S., oil and oil-product inventories have fallen more than expected in recent weeks, thanks in part to a pickup in demand for transportation fuels.

Brent crude is on track for its highest close since May 2019.

“The bull recipe for the oil market is still intact: reviving demand, muted U.S. shale oil response together with controlled and restrictive supply from OPEC+, resulting in further declines in inventories and yet higher oil prices,” said Bjarne Schieldrop, chief commodities analyst at Swedish bank SEB.

The OPEC cartel and its allies agreed Tuesday to press ahead with earlier plans to increase output by 450,000 barrels a day starting in July. Meanwhile, Saudi Arabia will continue to unwind its unilateral cuts of one million barrels a day that it put in place earlier this year.

“Demand growth is outpacing supply gains even with the agreed month-by-month OPEC+ production increases taken into account,” said Ann-Louise Hittle, vice president of Macro Oils at consulting firm Wood Mackenzie. “Sticking to increases planned at the April meeting is what the market needs,” she added.

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