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Africa Last Updated: Feb 8, 2020 - 11:49:11 AM

Nigeria dependence on oil revenue underlined by coronavirus
By Ruth Olurounbi, Africa Report, 7 February 2020
Feb 8, 2020 - 11:46:00 AM

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Oando is just one of many Nigerian companies threatened by oil lower prices

The fast spreading coronavirus from China is threatening Nigeria’s primary source of revenue, oil.

Demand for oil has slumped in the months since the outbreak of the epidemic.

“Nigeria is still hopelessly dependent on crude oil and so anything the impacts the price or demand for crude oil impacts us. And because we have no fiscal buffers or significant foreign reserves the impacts will be significant,” Dr Nonso Obikili, Director at Turgot Centre for Economics and Policy Research said.

Global oil prices fell by as much as 15%, falling to a three-month low since the outbreak, putting pressure on Africa’s largest oil producer’s plan to raise N2.64 trillion in revenue from oil sales from output of two million barrels a day.

The benchmark price assumed in the national budget is $57 per barrel.

Brent Crude crude rallied to $54.80 on 6 February, from a low of $47 on Monday as impact of the coronavirus hit oil demand, according to data from Citigroup.

Citi projects Q2 Brent Crude prices at $50, down from a previous forecast of $68 per barrel; and expects Q3 Brent Crude prices to reach $53, down from $63 per barrel. It also revised the Q4 forecast to $58, up from $57 per barrel.

“In this instance if the oil prices drop further or if it remains in the 50s for a significant period of time then we could begin to see even more pressure on the already pressured exchange rate and even more pressure on the already struggling fiscal space,” Obikili said.

Source:Ocnus.net 2020

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