Trouble for Nigeria as Oil Hits $56 Per Barrel, Below $57 Benchmark
By Adedapo Adesanya
Panic continues to grip the global oil market as price of the international benchmark futures, Brent crude, dropped below $57 per barrel on Friday afternoon, spurred by the spread of the coronavirus in some countries.
Coming home, this is a big worry for the Nigerian government, which pegged the average price of crude oil this year to $57 per barrel in the 2020 budget signed into law last month by President Muhammadu Buhari.
As at the time of this report, the Brent crude was trading down by 60 cents or 1.05 percent at $56.73 per barrel, while the US West Texas Intermediate (WTI) fell 40 cents or 0.77 percent to sell at $51.74 per barrel.
With this development, if prices stay low as a result of panic in the market fuelled by the virus from China, the proposed N2.64 trillion expected from oil revenue may take a hit. Nigeria, Africa’s largest oil producer, produces about 2.18 million barrel per day.
The coronavirus spread has continued to shake demand since it spread from China to around 20 countries, killing more than 200 people and affecting more than 8,000 people as the World Health Organisation (WHO) declared on Thursday that the outbreak was now a global emergency.
This may spur the Organisation of the Petroleum Exporting Countries (OPEC), which Nigeria is a member, into quick action as there are talks of deeper cuts. Also, there are strong possibility of moving an upcoming policy meeting to early February from March 5 and 6 to address the impact of coronavirus on crude demand.
Analysts have said that there are possibilities that output cuts might extend from the 1.7 million barrels reached at the cartel’s meeting last year December.