Economy: Fear Grips FG As Oil Price Drops (Read Details)

There were fears, weekend, as the price of Nigeria’s premium oil grade, Bonny Light, dropped to $73.87 per barrel, from $76.37, recorded last week, indicating a fall of three percent.

The Federal government had benchmarked the 2023 budget at $75 per barrel and 1.8 million barrels per day, bpd, including condensate, which Nigeria has the capacity to produce between 300,000 – 400,000 barrels per day, bpd.

The drop in price that also affected other crudes was attributed to the global economic slowdown, especially some developed economies that buy commercial oil from Nigeria and other major oil nations.

In its latest report obtained by Vanguard, yesterday, Goldman Sachs – a research organization – disclosed that based on the global economic slowdown, it would not be possible for oil to hit $100 per barrel this year, which it had earlier forecasted.

Goldman Sachs noted that the current poor state of the global economy has already culminated in the collapse of two big banks in the United States.

The report which now expects oil price to hover at $94 per barrel in the coming 12 months, before landing at $97 per barrel in 2024, stated: “Oil prices have plunged despite the China demand boom given banking stress, recession fears, and an exodus of investor flows.”

Oil price, production

In its March 2023 Monthly Oil Market Report, Monthly Oil Market Reports, MOMRs, obtained by Vanguard, the Organisation of Petroleum Exporting Countries, OPEC, that Nigeria’s oil production rose MoM by 3.8 percent to 1.306 million bpd in February 2023, from 1.258 million bpd recorded in the preceding month of January 2023.

Also, on year-on-year, YoY, the nation’s oil production increased by 3.8 percent to 1.306 million bpd in February 2023, from 1.258 million bp/d recorded in the corresponding period of 2022.

Budget 2023 challenged — OGSPAN
Despite the rise in oil output, the National President, Oil, and Gas Service Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, observed that Nigeria might be challenged to meet its 1.8 million bpd OPEC quota, excluding condensate, because of increased pipeline vandalism, oil theft and illegal refining in the Niger Delta.
He said: “The governments still have a long way to go in funding the budget. We should not be comfortable because of the recent increase in production.

There are indications that the recent gains remain by far less than the huge volumes we still lost to oil thieves in the Niger Delta.”
But in another interview with Vanguard, the Lead promoter, EnergyHub Nigeria, Prof. Felix Amieyeofori, noted that the current market situation would be short-lived.

He said: “This is seasonal. The average price forecast as China stabilizes this year will be around $80-100 bpd. It will bounce back.”