The international oil benchmark, Brent crude, tumbled on Wednesday to $56 per barrel, its lowest level in seven years as the United States-China trade war worries gripped the market.
The decline in oil price imposes a serious threat to Nigeria’s economy as the 2019 budget is based on an oil benchmark of $60 per barrel.
The further decline in oil prices followed an unexpected build in US crude supplies and fears of lower crude demand due to the deepening trade tensions.
Brent crude, against which Nigeria’s oil is priced, fell by $2.60 to $56.34 as of 8.10pm on Wednesday. It has lost more than 20 per cent since hitting its 2019 peak in April.
The PUNCH reported on Tuesday that the oil price extended its decline on Monday, trading below Nigeria’s $60 per barrel budget benchmark.
The 2019 budget, which was signed by President Muhammadu Buhari in May, was based on oil production of 2.3 million bpd (including condensates) with an oil benchmark price of $60 per barrel.
Brent has plunged more than 12 per cent after US President Donald Trump said last week that he would slap a 10 per cent tariff on a further $300bn in Chinese imports from Sept. 1, sending global equity markets into a tailspin, according to Reuters.
Source: Punch Newspaper.
