The ongoing events in the oil market have become a global concern, as crude oil prices have been crashing to unprecedented levels.
The Federal Government of Nigeria is closely monitoring the situation following the continuous crash of global oil prices, including Nigeria’s headline crude, Bonny Light. This comes as the country faces a serious revenue crisis despite the revised 2020 budget.
According to information from Oilprice.com, the Bonny light crude crashed by over 29% to sell at $14.75 per barrel on Tuesday, April 21, 2020. The massive downturn and the volatility of the oil market have continued to seriously threaten the Federal Government’s revised 2020 budget, which has an oil benchmark of $30 per barrel. This is further compounding the financial problem being faced by both Federal and State Governments in the face of adverse impacts of the Coronavirus pandemic.
The value of crude oil plunged and storage tanks around the world became scarce just days after measures were adopted by major oil producing countries to take care of the issues of declining oil prices and lower demand all resulting from the COVID-19 pandemic.
In the meantime, analysts have forecast that the historic low demand and supply gluts will continue to strain storage capacities, thereby giving little hope of oil price recovery. Even with the output cut by OPEC+ and some oil-producing countries, analysts believe that the recovery of the oil market will take time, as it will only start easing off when the solution to the Coronavirus pandemic starts to record success.
Meanwhile, OPEC and non-OPEC members are set for another conference where oil ministers will discuss the global oil market as plunging demand crushes prices. Note that Brent crude is selling for less than $19 per barrel, even as OPEC basket is selling for $14.19 per barrel.