By Udeme Akpan
THE price of crude oil, which hit the roofs at $85.00 in October, 2018, yesterday, hovered at $53.00, as instability continued to haunt the global market.
Specifically, the price of Bonny Light, Nigeria’s premium oil grade, Brent, West Texas Intermediate, WTI and OPEC Basket, stood at $ 53.34, $45.28, $45.42 and $53.20 per barrel, respectively.
The situation was attributed to continued over-supply from non-OPEC members that are not currently involved in the OPEC and non-OPEC oil cut.
Investigation showed that it would likely impact negatively on Nigeria’s 2019 budget, which was benchmarked at $60 per barrel.
In his budget presentation to the National Assembly, President Muhammadu Buhari had stated: “the proposal is based on the following assumptions: Oil price benchmark of $60 per barrel; Oil production estimate of 2.3 million barrels per day, including condensates; Exchange rate of N305/$.”
He had also stated: “A total expenditure of N8.83 trillion is estimated for 2019. This includes grants and donor funds of N209.92 billion. This provision is less than the 2018 FGN appropriated expenditure estimate of N9.12 trillion. However, it is higher than the N8.6 trillion originally proposed by the Executive Branch to the National Assembly for 2018.”
“The budget deficit is projected to decrease to N1.86 trillion (or 1.3 percent of GDP) in 2019 from N1.95 trillion projected for 2018. This reduction is in line with our plans to progressively reduce deficit and borrowings. The proposed N8.83 trillion of 2019 Aggregate Expenditure comprises: Recurrent Costs of N4.04 trillion.”
However, speaking in Angola recently, secretary general of OPEC, Dr. Mohammad Barkindo stated: “Following extensive analysis and deliberations on the immediate oil market prospects and, in view of a growing imbalance between global oil supply and demand in 2019, the partners decided to adjust the overall production by a combined 1.2 mb/d, effective as of January 2019 for an initial period of six months.
“If I was to use a single word to describe the impact of this cooperation on the oil market, it would be: transformative. A long-absent element of stability has been reintroduced. There have been significant changes in industry-wide and public perceptions of OPEC. The Organization has ably demonstrated its credentials as a body committed to international cooperation, working with other producers, honouring its commitments and promoting mutual respect among all nations.”