Serious challenge is brewing for the 2020 budget of the Federal Government following strong indications OPEC may consider cutting 500,000bpd in its next ministerial meeting come Friday, February 14 in Vienna, Austria.
Analysts say if such decision is taken coupled with the negative impacts of coronavirus across world market dynamic, the 2020 budget may record more deficit financing than the staggering N4.6tn recorded in 2019 financial year.
Whereas few OPEC members are upbeat, Russia seems to be strong in going for cuts as a way of pushing up prices.
Recall that since weekend on the effects of Coronavirus in China, industrial production which translates to high oil demands had plummeted giving rise to steady drop and stay of oil price at a point far below the 2020 federal budget. e
In the proposed Nigeria’s 2020 budget is predicated on 2.18 million bpd at a price of $57 per barrel, while the exchange rate is expected to remain N305/$1, but the reality is that oil price since this week had remained abysmally at around $54.76.
This scenario is more so playing out at a time news has that many Nigerian oil cargoes are still hovering unasked for on the high seas looking for unavailable buyers.
As all hope are on the outcome of the OPEC and non-OPEC panel referred to as Joint Technical Committee (JTC), the cartel is planning on holding an emergency ministerial meeting on February 14.
Though it had earlier agreed with partners to cut output further by 500,000bpd from January to March 2020, the outcome of the meeting will give a clear indication of the direction of production cuts possibly from the previous cut of 1.2 million bpd already agreed.
Already, development economists, who had insisted that all the entire federal noise on economic diversification is yet to yield any meaningful results, thus, creating a possible shock in the economy in the event of cuts upon dwindling prices.
