Business Nigeria: Oil Price Drops $10 Below New 2015 Benchmark

[LequteMan]

Nigeria- The Oil Producing Export Country, OPEC, basket price for crude oil on Tuesday 30 December 2014 dropped to $54.44/barrel, $10.56 below Nigeria's $65/barrel proposed benchmark for the 2015 budget announced by Minister of Finance, Ngozi-Okonjo Iweala a couple of weeks ago.

Brent oil went for $57.34/barrel, according to figures revealed by Proshare, which is $7.66 below the current benchmark for 2015 budget.

Global oil price has been on a free-fall for quite a while and experts don't see the trend changing, at least in the near future.

The falling oil price has had a negative impact on Nigeria's economy, forcing the Central Bank to devalue the Naira, which automatically slowed the country's economic growth forecast for 2015 cut down to 5.5% from 6.4%.

The federal government has had to slash the benchmark from $76/barrel to the current $65/barrel in order to accommodate the oil fall. Is the time ripe to further slash the benchmark or should hope prevail?

#Nigeria #Oil #OPEC

 

[LequteMan]

Is there a solution to the oil crash woe? @Temitope

 

[Temitope]

We can only think of a solution if we know what the real problem is. I think the question should be about what has been responsible for the oil price crash. The economists will have to find that out for us.

 

[LequteMan]

weak demand& surplus supply and stiff competition are the factors responsible for the oil crash @Temitope.

1. IS got control of some areas in the middle-east and started selling oil at very cheap prices, destabilizing the market.

2. The emergence of shell oil also created enough competition - the reason why US says it stopped buying oil from Nigeria.

When situations like these arise, members of the OPEC reduce supply in order to stabilize the market until threats are taken care of. However, Saudi Arabia (who normally makes this sacrifice) is refusing to budge with the current predicament, saying it doesn't care if it falls to $20/barrel.

So here we are.

 

[Temitope]

This is a serious matter. I guess this is partly deliberate to frustrate some countries like Nigeria. Madam OPEC president (Alison-Madueke) and other stakeholders should plead with Saudi to help in this matter.

This is time for Nigeria to also intensify efforts in developing other natural resources, especially agriculture so that when things fall apart like this in the oil sector, the center of our economy can still hold.

 

[abujagirl]

Nigeria should pull out of OPEC

 

[LequteMan]

This is a serious matter. I guess this is partly deliberate to frustrate some countries like Nigeria. Madam OPEC president (Alison-Madueke) and other stakeholders should plead with Saudi to help in this matter.

This is time for Nigeria to also intensify efforts in developing other natural resources, especially agriculture so that when things fall apart like this in the oil sector, the center of our economy can still hold.

It's really serious, I don't know if Saudi will budge. Rumours say Saudi remains unmoved because of geopolitical reasons (US punishing Russia).


People have been hammering for diversification of Nigeria's economy for years and we haven't really seen much about it- although agriculture seems to be making new waves.

I think what FG has to do is invest heavily in Nigeria and Nigerians, but that itself is a heinous herculean task.

 

[abujagirl]

@Lequte did i tickle you? What benefits is Nigeria deriving from staying put in OPEC. Kindly educate me

 

[LequteMan]

Yes you tickled me