Crude oil prices have declined, with the global benchmark (Brent crude) currently trading below $80 per barrel; the lowest ever price in more than a month.
Brent kept fluctuating between $79 and $80, before finally stabilising below the eighty dollars mark, especially today.
Reason for the price drop
This development has been linked to a major increase in crude oil inventories, especially in the United States of America. According to the country’s Energy Information Administration, crude inventories in the United States of America have been rising since the middle of September, reaching its month-long high of 6.5 million barrels earlier this month.
This contradicts earlier forecasts
Just recently, there was a serious speculation that global oil prices might spike as much as $200 per barrel in the aftermath of the mysterious disappearance of the Saudi-American journalist, Jamal Khashoggi.
Mr Khashoggi’s disappearance and feared death, which happened weeks ago inside the Saudi consulate in the Turkish capital Istanbul, sparked international outrage. There was pressure on the United States’ Government to impose sanctions on Saudi Arabia over the kingdom’s failure to account for what happened to the journalist.
This sanction, according to the speculations, would have ultimately cut off oil supplies from Saudi Arabia into the international market; thereby drastically reducing inventories and causing prices to spike.
Earlier forecasts by Total SA and CBN’s Emefiele have been proven wrong
As we reported earlier, the Global Chief Executive Officer of Total SA, Mr Patrick Pouyanne last month projected that oil price would soon reach $100. The Governor of the Central Bank of Nigeria, Godwin Emefiele, reinforced this sentiment shortly afterwards by stating that he did not think crude oil would trade below $80 per barrel for the rest of 2018. Nairametrics analysed that his forecast could be wrong, and now we can prove that with evidence.
There is hope for Nigeria
In the midst of this latest development, Reuters reported that offers for Nigerian oil went up yesterday. This is a good development, provided that global oil prices do not decline any further.
Nigeria needs the price of oil to remain high because the country’s economy is largely dependent on foreign exchange earned through crude exportation.