Site icon Nairametrics

Critical times loom for Nigeria as oil price dips below $60 budget benchmark

Recession, 2020 revised budget, spending inefficiencies, and a looming debt hole  , President Muhammadu Buhari, loans, Oil price, FG, Solar vehicles, P&ID firm, Nigeria's GDP, Debt Servicing: Nigeria pays $1.12 billion to World Bank, others in 10-month , How the latest Fitch report affects you in 2020 , Nigeria’s credit rating faces downgrade by Fitch, Nigeria’s fiscal crisis looms, oil hits $32, S&P downgrades Nigeria to junk rating, as India cuts interest rates

Oil price dropped to below $60 a barrel in the early hours of Tuesday, as trade tension between the U.S and China intensifies. This is the first time Brent oil price would inch down below $60 since January 2019.

Specifically, Brent Crude oil price has continued its free fall in recent days and it has finally fallen below $60, as it traded at $59.79 per barrel. Also, the West Texas Intermediate (WTI) was down 24 cents, or 0.4%, at $55.42 a barrel.

Trade tension dips oil price: The latest drop in oil price is due to concerns about weaker crude demand after U.S. President Donald Trump disclosed he would impose tariffs on more Chinese imports, which is potentially ramping up a trade war between the world’s two largest economies.

[READ: President Buhari signs N8.91 trillion 2019 budget into law]

Nigeria’s budget benchmark: The sharp drop in oil price may threaten the implementation of Nigeria’s 2019 budget. Recall that President Buhari signed the N8.83 trillion budget for the 2019 fiscal year with an assumption that oil price would remain $60.

Office of budget

Essentially, the 2019 budget was benchmarked at $60 just as Brent Crude in October 2018 climbed to a record high of $86.74 per barrel. However, the recent dip in oil prices suggests that critical times are ahead.

[READ: Nigeria paid N293 billion to service external debt in half-year 2019]

Another development is being mooted that oil prices could drop to as low as $20 and $30 a barrel as industry experts anticipate the U.S-China trade war to further escalates.

[READ FURTHER: This is when I will devalue the naira – Emefiele]

 

Exit mobile version