Crude oil, Nigeria’s biggest revenue earner, yesterday surged past $30 per barrel,
heightening hope for the country’s budget.
Nigeria, which hitherto announced $57 per barrel oil benchmark in the 2020 budget, has been forced to crash the benchmark to
$30 per barrel buoyed by Coronavirus pandemic-induced fall in demand for the commodity.
The crude last week sold below $20 per barrel, worsening the woes for Nigeria, which depends largely on crude proceeds
to service over 85 per cent of its budget.
The new $30.23 per barrel price on Tuesday was caused by an unexpected
commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as
the coronavirus pandemic crushed fuel demand.
U.S. West Texas Intermediate crude futures
climbed $1.78, or 7.4%, to trade at $25.92 per barrel. Brent crude futures climbed 60 cents, or 2%, to trade at $30.23 per barrel.
The benchmark fell $1.34 on Monday. Saudi Arabia said overnight it would cut production by a further one million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.
The cuts, combined with the world’s biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease pressure on crude storage capacity.
“This reduction in production provided excellent optics encouraging other OPEC+ members to comply and even offer
additional voluntary cuts, which should quicken the global oil markets’ rebalancing act,” Stephen Innes, chief global market strategist at AxiCorp, said in a note.
SOURCE: newtelegraphng.com