The observed continuous drop in the international oil benchmark, Brent crude, which plummeted to its lowest level in more than a year since Monday, had become a source of worry for the Nigerian economy as the earnings is the pivot for the budget.
The fear is that the commodity had been trading below the Federal Government’s benchmark of $57 for the 2020 budget.
Key factor responsible for the global drop in oil price is linked to the coronavirus outbreak hitting fuel demand in China.
The 2020 budget, which was signed by President Muhammadu Buhari, in December, was based on oil production of 2.18 million barrels per day with an oil price benchmark of $57 per barrel.
Besides, the oil price is crashing even at a time daily crude production has in means gone close to the daily target of 2.18mbpd.
The Federal Government is looking to generate N2.64tn oil revenue, which is 32.34 per cent of expected total revenue for this year, with non-oil revenue projection being N1.80tn.
Brent, against which Nigeria’s crude oil is priced, had risen above $70 per barrel early last month following the killing of an Iranian general, Qassem Soleimani, by the US on January 3.
However, the price, which has been on a downward trend since the coronavirus broke out last month, plunged by $2.23 to $54.39 per barrel as of 9.20pm Nigerian time on Monday.
Recall that the drop started since last week of January as it fell below the $60 per barrel mark on January 28.
