International Trade

The U.S. House of Representatives has condemned the effort of Nigeria's military government to thwart that country's return to civilian and democratic rule and in jailing prominent human rights activists and democratic political leaders. This report assesses the potential economic impact of a multilateral oil embargo on Nigeria, the world oil market, and the U.S. economy. GAO also examines the political viability of undertaking such an action. Finally, GAO assesses the potential economic impact of a U.S. unilateral oil embargo on Nigeria, the world market, and the U.S. economy, as well as its potential political impact on Nigeria.

GAO found that: (1) although a multilateral oil embargo could have a devastating effect on Nigeria's economy, there is little international support for implementing such an embargo; (2) a multilateral embargo on Nigerian oil could reduce worldwide oil supplies by 1.6 million barrels per day and cause U.S. and international oil and gas prices to increase by $2 to $5 per barrel or 5 to 12 cents per gallon, respectively; (3) Department of Energy officials believe that any potential adverse effects of a Nigerian oil embargo on international and domestic oil prices could be offset by increases in oil production by other oil producing nations; (4) the international community does not support a proposed multilateral oil embargo because Nigeria is not viewed as a serious threat to world peace and security; (5) a unilateral U.S. embargo on Nigerian oil would have virtually no effect on Nigeria's economy and oil exports; (6) U.S. commercial interests in Nigeria could be significantly adversely affected by an unilateral embargo; and (7) the potential political impact of a multilateral or unilateral oil embargo is difficult to predict because Nigeria's political opposition is fragmented and its political situation is volatile.