According
to the CBN, crude oil price has risen to $42.94per barrel, a 33 percent
rise compared to $32.25 per barrel in the previous month.[i]
The rise comes just as many economies are reopening, recording a marginal
increase in demand. However, world oil demand is still expected to drop by 9.1
million barrels per dollar.[ii] OPEC and its member countries have agreed to
drop oil production in order to control market supply and consequently price.
With this agreement, the revenue gains from increasing oil price for Nigeria
could be marginal as the country is expected to cut production by about 22
percent to 1.4 million barrels per day which may also hinder the realization of
the revised 2020 budget considering that the crude oil production estimate is
1.7 million barrels per day. To ensure performance of the 2020 budget,
concerted efforts must be in place to ensure optimum collection of non-oil
revenues by blocking leakages and non-remittances through improved administrative
and monitoring mechanisms.
July 14, 2020
Nigeria Economic Update (Issue 25)
Related
Nigeria Economic Update (Issue 12)
The naira/dollar exchange rate remained largely stable at the parallel
market at ?320/$ during the period7, albeit slight
fluctuations on February 29, 2016 (?325/$) and March 2, 2016 (?328/$). The
decline in the hoarding of foreign currency as well as the substantial
reduction in the speculative demand for dollars were the two key factors
responsible for the ease of fluctuations in the forex market8. With the slight
increase in the price of crude oil, Nigerias foreign reserve slightly grew by $56 million, from 27.81 billion to $27.84 billion9.
With the continued increase in the price of crude oil, a modest build-up of
foreign reserve to guard against unfavourable commodity price movements is
expected in the near term.