July 14, 2020

Nigeria Economic Update (Issue 25)

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.

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Nigeria Economic Update (Issue 29)

OPEC weekly basket price decreased marginally from $45.95 on June 24, 2016 to $45.26 on July 1, 2016,while Nigerias bonny light fell by $1, from $48.90 to $47.91. The apparent decline in crude oil price was driven by lingering market demand uncertainty, following the unexpected Brexit referendum. More so, ease in supply disruptions in Nigeria and Canada may have contributed to the downward pressure on prices. Going forward, until there is greater regulatory precision on global oil output levels, prices may likely remain stuck or continue to exhibit a downward trend. Although, Nigerias fiscal constraints slightly relaxed with oil production increasing in the review week (following repairs on sabotaged pipeline channels), potential global crude oil oversupply threatens governments revenues. However, oversupply threats could be reduced if there is a consensus on oil production quotas in the upcoming OPEC meeting.