Crude oil price, especially Brent is trading at around $84 a barrel, a level seen after June 2014. The past three or four quarters of consistently higher prices have helped oil-producing countries to turn their economies around and Nigeria desperately needs to join this group.
Oil producing countries’ fiscal situation, which had worsened when prices fell to $25-$30, has now improved to a level in which their current realisations are sufficient enough for them to balance their budgets and wipe out the deficit of the past. While some like Venezuela, Nigeria, Algeria are still not quite comfortable. several others have started generating and investing their surpluses in assets across the globe.
Experts noted that several countries in the Nordic region have balanced their economies and gradually reduced dependency on oil. They are investing their surpluses across the world, with rising oil prices, in a professional manner. Also Middle Eastern countries like Qatar, Abu Dhabi, Kuwait are following the Nordic model to allocate surplus money across the globe.
Nigeria entered its first recession in 25 years in 2016, mainly caused by lower oil prices and attacks in the Niger Delta crude-producing region. It emerged from recession early last year but growth remains sluggish and inflation above the central bank’s single-digit target range. Its 2018 budget was premised on an oil price benchmark of $51 per barrel and as such needs to use the surplus from crude sales wisely.
Oil prices are expected to stay high in the medium term. In the near term, momentum is bullish but there are hopes Russia and Opec will release more oil to fill the gap created by Iran’s falling supplies post US sanctions. Opec nations are expected to raise output following their upcoming meeting in November.
Source: Hellenic Shipping News