According
to the CBN, crude oil price has risen to $42.94per barrel, a 33 percent
rise compared to $32.25 per barrel in the previous month.[i]
The rise comes just as many economies are reopening, recording a marginal
increase in demand. However, world oil demand is still expected to drop by 9.1
million barrels per dollar.[ii] OPEC and its member countries have agreed to
drop oil production in order to control market supply and consequently price.
With this agreement, the revenue gains from increasing oil price for Nigeria
could be marginal as the country is expected to cut production by about 22
percent to 1.4 million barrels per day which may also hinder the realization of
the revised 2020 budget considering that the crude oil production estimate is
1.7 million barrels per day. To ensure performance of the 2020 budget,
concerted efforts must be in place to ensure optimum collection of non-oil
revenues by blocking leakages and non-remittances through improved administrative
and monitoring mechanisms.
July 14, 2020
Nigeria Economic Update (Issue 25)
Related
Nigeria Economic Update (Issue 28)
OPEC
weekly basket price increased marginally from $45.09 on June 17, 2016 to $45.95
on June 24, 2016, while Nigerias bonny light increased from $47.61
to $48.90 (with a peak of $49.2 on June 23, 2016)within the same
period. The rise in oil price, amidst downward pressures, was likely driven by
expectations that the UK would remain in the EU. However, price fell (to
$47.61) on June 24, 2016 following the outcome of the UK referendum (on June
23, 2016) to leave the EU. This was driven by concerns over a possible
contagion effect of further disintegration on the EU (a major oil consumer) which
could drive down oil demand in the longer term. In the medium term, oil prices could face
further pressure as a result of rising crude oil output and attenuating production
disruptions in Canada and Nigeria. Although, the recent rise in oil prices seem
transient, Nigeria can benefit from the marginal rise if disruptions in oil production
is quickly resolved
Nigeria Economic Update (Issue 49)
Nigerias
Petroleum Products Imports statistics show a gradual reduction in the volume
and value of petroleum imports (PMS, AGO, HHK) between May and September 2016. Specifically,
volume of imports declined by 34.1 percent for PMS, 37.6 percent for AGO, and
60.3 percent for HHK in the period.The significant decline in
imports in the reporting periods may be as a result of persistent forex
scarcity issues faced by importers. On account of stagnation in
domestic production of refined petroleum products, continuous
decline in oil imports may create a demand gap with upward pressure on gasoline
prices in the economy.