The outbreak of coronavirus in China, yesterday, pushed oil prices downward to almost $57 per barrel, a situation that may worsen the implementation of Nigeria’s 2020 budget.
Earlier this month, price had risen above $70/barrel, following the face-off between United States and Iran after U.S. air strike had killed a top Iranian military commander.
However, Brent fell to $57.90 per barrel Thursday, as the Organisation of the Petroleum Exporting Countries (OPEC), is reportedly considering an emergency meeting in February, to assess the growing impacts of the coronavirus, which has spread to major countries of the world.
Algerian Energy Minister, Mohamed Arkab, hinted through the Algerie Presse Service, that the cartel could move its meeting scheduled to hold early March to February, as oil price continue to decline.
“It is very likely to advance to February the OPEC meeting, initially scheduled for the beginning of March, so that we can find the means to ensure market balance,” Arkab was quoted in Algerie Presse Service saying.
While Nigeria had signed a N10.33 trillion budget for 2020, predicated on oil price at $57/barrel, prevailing realities at the international oil market could worsen the nation’s fiscal outlook, even as some economists feared that the reality could cause another slip into recession and shortage of foreign exchange, with foreign reserves currently about $40.95 billion.
Sources at OPEC had earlier discussed that the cartel may push for an extension of current oil output cuts till June, while strictly enforcing deeper reductions should oil demand in China is significantly impacted by the spread of coronavirus, Reuters had reported.
UAE’s Energy Minister, Suhail al-Mazrouei, had on Monday said: “It is important that we do not exaggerate projections related to future decreases in oil demand due to events in China, and the market does not over-react based on psychological factors, driven by some traders in the market.”
A former chairman of council, Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Ajibola, had told The Guardian that as the 2020 fiscal budget remained in deficit, decline in oil price and production quota for Nigeria’s projected 2.18 barrels daily would have a devastating effect on the budget implementation, thereby worsening the projected deficit.