SAUDI Arabia has increased its oil supply as its state-owned company, Aramco, has pledged to supply a record 12.3 million barrels per day (bpd) from next month, which is a massive increase to flood the market.
Also oil prices rebounded on Tuesday as the international benchmark grade, Brent crude, trading 9.6 per cent higher at $37.64 per barrel as against $35.45 per barrel on Monday.
The continued plunge in oil prices is piling pressure on Nigeria to devalue the naira as dwindling export revenue depletes foreign-exchange reserves, curbing the Central Bank of Nigeria’s (CBN’s) ability to support the currency.
Reserves have decreased by 20 per cent in the past two years to the lowest since November 2017, and may soon reach the $30 billion threshold set by CBN Governor Godwin Emefiele for the country to consider devaluation, Jason Daw and Phoenix Kalen, strategists at Paris-based Societe Generale SA, wrote in note. The CBN may start adjusting currency policy before it reaches that point, they said.
The Nigeria Employers’ Consultative Association (NECA), yesterday raised the alarm over the threat plunging oil prices posed to the implementation of this year’s budget.
Its Director-General, Dr. Timothy Olawale said it is worrisome that the global oil price has tumbled below the $57 on which the 2020 budget was premised.
“The scale of the reduction is eliciting unpleasant memories of 2014 and 2015 oil price downturn that largely pushed the country into recession in 2016. The fluctuation of the oil price is already threatening the National budget benchmark and overall revenue of the government for 2020, with consequential negative implication for the proposed capital projects and other critical expense heads.