By Ediri Ejoh
LAGOS—International agency Fitch Ratings yesterday said that Nigeria needs crude oil price of $139 per barrel to achieve balanced budget in 2017, adding this makes the country worst in oil break-even point among 14 top oil exporters.
Fitch disclosed this in a report on 14 major oil exporting nations in the Middle East, Africa and emerging Europe
Meanwhile, the price of crude oil yesterday rose to a one-month high yesterday rising more than 1 percent, on track for a fourth straight day of gains, with Brent crude futures gaining at 61 cents at $54.97 per barrel.
Citing Kuwait in the best position of major oil exporting nations in the Middle East, Africa and parts of Europe to have a balanced government budget this year with oil forecast to average $52.50/pbl, Fitch stated that Nigeria is worst off, needing an oil price of $139/bbl to balance its budget.
The agency noted that even after cuts in government subsidies and currency devaluations, about 11 of these listed exporting nations won’t have balanced government budgets this year, including Saudi Arabia.
It added that, “Fiscal reforms and exchange rate adjustments are generally supporting improved fiscal positions compared to 2015, but have not prevented erosion of sovereign creditworthiness.”
However, the price of Brent crude, a global benchmark, has averaged about $55/bbl this year.
The rating agency, further said it “substantially” raised the fiscal break-even prices for Nigeria, Angola and Gabon from 2015 levels because of rising government spending.
Meanwhile, oil prices rose more than 1 percent on Thursday, on track for a fourth straight day of gains, as gains put crude on track for its best close since a March 8 rout when investors bailed out of bullish positions due to concerns about supply.
Brent crude futures gained 61 cents, or 1.1 percent, to $54.97 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 1.3 percent, or 66 cents a barrel to $51.81.
Crude prices have been rebounding in the last two weeks from that decline. Refinery runs are starting to increase as the U.S. summer driving season approaches and gasoline inventories have been declining.
Yet U.S. government data still show crude inventories at record levels, prompting some analysts to grow concerned about speculators jumping back into the market after several weeks when they reduced positions in response to inventory figures.
According to Director in Energy futures at Mizuho, Robert Yawger, “It’s hard to justify the move on the on back of fundamentals.”