For the first time in six and a half years, the global oil benchmark Brent crude on Monday traded around $43 per barrel, $10 lower than Nigeria’s oil benchmark for this year’s budget.

The further slide in oil prices followed concerns about slowing Chinese demand, even as Iran and the United States look set to raise oil production.
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Chinese stock markets on Monday suffered their biggest one-day decline since the global financial crisis, exacerbating worries over the outlook for global oil demand.

Brent, against which Nigeria’s oil is priced, on Monday fell by $2.16 to at $43.30 per barrel, near its weakest since March 2009, while the US benchmark West Texas Intermediate was trading around $38.74 per barrel.

The steep decline in oil prices had in March forced the National Assembly to settle for $53 per barrel as the benchmark oil price for 2015 budget, down from $65 proposed by the Executive, which had to adjust it twice, from $78 to $73, and later to $65.

An economist and Managing Director/Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, told our correspondent in a telephone interview that “at $43 a barrel, it means from $108 to $116 in Nigeria last year, our revenue is down by 65 per cent.”

He said, “Anybody whose income drops by 65 per cent has to think very hard. We have some hard times ahead of us.”

He warned that oil price could decline further, saying, “Your benchmark price is at $53; average price by this time last year was $100 and now you are at $43 and you are going to $30; you don’t need anybody to tell you that.”

BMI Research had last week said Brent would not recover until 2018, downgrading its average price forecasts to $56 and $55 per barrel for 2016 and 2017, respectively, compared to an average of $57 in 2015.

It said, “The return of Iranian oil to market, coupled with strong project pipelines in North America, the Middle East, West Africa and Kazakhstan, will see global supply growth outstrip the growth in global consumption for the next two years. A rising overhang of crude will maintain downward pressure on Brent.”

The Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, said, “The slide is a reminder to Nigeria that it is not enough to set the budget benchmark at $53, steps must be taken to ensure that revenue is protected by hedging the country’s oil output to some extent.

“Furthermore, it is indicative of the need for Nigeria to diversify away from dependence on oil. The current slide is likely to continue due to China’s strong influence on the energy markets and the current economic headwinds in China are creating bearish pressures on global markets for securities, currencies and commodities.”

In Oni’s views, the key implication from this for Nigeria is the continued decline in government’s revenue; pressure on the naira to continue losing value against major currencies, especially in the parallel markets; while oil production may come under pressure as some fields are no longer economic at this price.

http://www.punchng.com/business/business-economy/oil-price-falls-10-below-budget-benchmark/

hiya! We need to diversify this economy, our over reliance on oil is bad,

Mheeeennn.. This one na gbege ooo

The western nations are trying so hard to bully oil producing nations , it's high time we diversify our economy,I know Buhari won't be bothered until the next election is close by

GEJ Why?

Hopefully this would continue. All the mastubators who think buhari would repair nigeria on his own let's ait and see. I still say the tru test to nigeria is the 2016 budget. Let's see how the wealth of nigeria is distributed.

The nation income continues dwindling but the 469 NASS members are still thinking if they should reduce their annual budget from N150 Billion to N120 Billion or not.

We can create another LNG-like source of income in 3 months using well-coordinated and surgical loot recovery.

The nation is in dire need of money, especially, for the downtrodden. These few looters came in with a known amount of financial and property worth (verified by CCB) but left with humungous worth with their names, kith' and kins tagging public fund along. The arithmetic is very simple ; we know the legally-endorsed cumulative entitlements of every public officer and their relations in four years.

The nation should just take back all inexplicable disparities between the expected worth of public servant and their real worth at the end of their tenure. We can recover Billions of dollar/naira every month for the next four years. Loots from States should be returned to the respective states while national loots should be returned to the FG.

Cutting the NASS budget by 70% or totally doing away with this arm of government for a while until better days should be on the front burner of national action. Afterall the NASS members lifestyles constitute insults to striving populace and tax-payers; and their duties have no direct positive impacts on the masses.

Even if oil fall to 10dollar per barrel, Nigeria is too rich to be poor only that we have bad leaders, ANYWAY BUHARI IS NOW WORKING N CHANGING THINGS

Wt Buhari in d helms of affairs......we gat noting 2 fear about even if crude oil becomes valueless in d market

tos4u:
Even if oil fall to 10dollar per barrel, Nigeria is too rich to be poor only that we have bad leaders, ANYWAY BUHARI IS NOW WORKING N CHANGING THINGS

How is Nigeria rich without oil?

The adjustment won't come overnight.

The good thing is that it may force us to become diversified.

greatiyk4u:
Wt Buhari in d helms of affairs......we gat noting 2 fear about even if crude oil becomes valueless in d market

Expect increases in tax rates and possibly more focus on agric and manufacturing.

I pray our able presido stabilizes the global oil price and makes N1 equal to $1 as he promised us during campaign.

Only the Government can solve this issue, diversification is unavoidable at this point as well as reduction in spendings

greatiyk4u:
Wt Buhari in d helms of affairs......we gat noting 2 fear about even if crude oil becomes valueless in d market

I concur

Ghandi12:
The nation income continues dwindling but the 469 NASS members are still thinking if they should reduce their annual budget from N150 Billion to N120 Billion or not.

We can create another LNG-like source of income in 3 months using well-coordinated and surgical loot recovery.

The nation is in dire need of money, especially, for the downtrodden. These few looters came in with a known amount of financial and property worth (verified by CCB) but left with humungous worth with their names, kith' and kins tagging public fund along. The arithmetic is very simple ; we know the legally-endorsed cumulative entitlements of every public officer and their relations in four years.

The nation should just take back all inexplicable disparities between the expected worth of public servant and their real worth at the end of their tenure. We can recover Billions of dollar/naira every month for the next four years. Loots from States should be returned to the respective states while national loots should be returned to the FG.

Cutting the NASS budget by 70% or totally doing away with this arm of government for a while until better days should be on the front burner of national action. Afterall the NASS members lifestyles constitute insults to striving populace and tax-payers; and their duties have no direct positive impacts on the masses.

Unfortunately, it's the downtrodden that fight online and offline to defend those who have looted their future.

The "fear of Buhari" will make sure the price goes up again.

Oh oh.

Directionless country.

A destroyed country.

hopilo:
GEJ Why?

Muron Explain how this decline concerns GEJ

mrborntodoit:
The western nations are trying so hard to bully oil producing nations , it's high time we diversify our economy,I know Buhari won't be bothered until the next election is close by

The western Nations themselves are also oil producing. Stop blaming other people for your failure that's a sure way to unending failure.
A Nation that fails to plan , Plans to fail....

mrborntodoit:
The western nations are trying so hard to bully oil producing nations , it's high time we diversify our economy,I know Buhari won't be bothered until the next election is close by

Typical black African, instead of coming out of your shell and doing something for yourself, you rather feel sorry and continue to languish in penury.

E no concern me tho....

Because the "Igbos want our oil" will be using one barrel to buy a cup of rice soonest.
(Picks_teeth), wetin concern me, like I asked.

Zoo is falling, it is crumbling.

Companies are recording losses, oil price is falling, chaos everywhere, looting, fraud, scams, oh Boi eh.

Na so the zoo take dey fall?

EasternLion:


Typical black African, instead of coming out of your shell and doing something for yourself, you rather feel sorry and continue to languish in penury.

E no concern me tho....

Because the "Igbos want our oil" will be using one barrel to buy a cup of rice soonest.
(Picks_teeth), wetin concern me, like I asked.

Zoo is falling, it is crumbling.




Companies are recording losses, oil price is falling, chaos everywhere, looting, fraud, scams, oh Boi eh.

Na so the zoo take dey fall?

The Things elders see from afar, kids can't see from the top of a tree

Not to worry Buhari's body language will stabilize oil price while nigeria becomes eldarado. The magician with miracle performing body language is in Aso Rock. Small time people will confess the lord being nigerian as the miracles fly in,yeye kawai!

If we do real forensic audit, our budget may be padded by as much as 20-30% so if we tackle corruption, contract inflation and practice real governance, this threat can be well managed.