COVID-19: Oil price dips further to $28

MORE trouble looms for the Federal Government’s 2020 Budget as oil price yesterday dipped further on the global economic tension driven by Coronavirus (COVID-19) pandemic. It is also fuelled by Saudi Arabia and Russia oil price war.

Nigeria’s premium Bonny Light tumbled to $28.72, which showed a 2.18 percent decline from $29 on Monday.

At current price, the 2020 budget revenue estimate put at N2.64 trillion based on $57 per barrel has lost N1.3 trillion, about 49.6 percent loss.

Similarly, Brent and West Texas Intermediate (WTI) tumbled to $28.13 and $23.71, which showed 7.50 percent and 13.25 percent decline respectively from $30.79 and $26.92 on Monday.

Meanwhile, The Federal government through the Ministry of Petroleum Resources, MPR, has dropped the price of Premium Motor Spirit, PMS, popularly known as petrol to N125 per litre, from N145 approved template in 2015.

Crude prices have dropped to its lowest levels in more than 17 years.

According to the Global Head of Currency Strategy & Market Research at FXTM, Jameel Ahmad, “The Oil price has smashed through its previous 2016 support level around $27 and is now valued below $25 for the first time since at least 2003. Investor sentiment is in such a state of freefall that it is possible that Oil can fall to $20 within hours, if not by the end of this week.”

Meanwhile, a statement signed by the Minister of State for Petroleum, Timipre Sylva, said: “The drop in crude oil has lowered the expected open market price of imported petrol below the official pump price of N145 per litre.

“Therefore Mr. President has approved that Nigerians should benefit from the reduction in the price of PMS which is a direct effect of the crash in global crude oil prices.

“Because of this situation, based on the price modulation template approved in 2015, the federal government is directing the Nigerian National Petroleum Corporation, NNPC to reduce the Ex-Coastal and Ex-Depot prices of PMS to reflect current market realities.”

But the Major oil Marketers Association of Nigeria, MOMAN, said that the federal government should consider removing subsidy on petroleum products riding on the back of the current low price of oil in the global market.

In a statement sent to Vanguard, Chairman of MOMAN, Mr. Tunji Oyebanji, stated that the N450 billion set aside by the government for subsidy in the 2020 budget would not add value to the nation’s downstream sector and the lives of Nigerians.

He, therefore, advised government to use the amount to develop other sectors in order to impact positively on Nigerian economy.