Oil Price Drops to $47 on Friday as OPEC Awaits Russia

• Oil Price Drops to $47 on Friday as OPEC Awaits Russia

Oil price plunged below $50 a barrel on Friday during Asian trading session as OPEC awaits Russia’s decision on the new 1.5 million barrels per day production cut proposed by 14 OPEC members in Vienna, Austria on Thursday.

The Brent crude oil, against which Nigerian oil is priced, declined from $50.42 per barrel it traded earlier on Friday to $46.95 per barrel before pulling back slightly to $47.76 per barrel.

Experts have said anything below 1 million barrels cut would have little to zero effect on oil price as that much as already been priced-in by the market. However, comments from Moscow suggested the Russian nation favour extension of the current agreement due to expire this month to a deeper cut that could hurt the nation’s chance to fund the 2020 budget.

In Nigeria, the Minister of Finance, Budget and Planning, Mrs Zainab Ahmed, said the government was working to review the 2020 budget of N10.59 trillion budget computed based on $57 per barrel at an assumed production level of 2.18 million barrels per day.

The nation’s foreign reserves has plunged in recent months to $36.6 billion, forcing the International Monetary Fund to lower the projected growth rate of the nation from 2.1 percent to 2 percent in 2020. While earlier in the week, the S&P downgraded the nation’s credit rating from stable to negative, citing weak revenue generation compared to rising debt profile and other financial obligations.

Also, another report said the nation was struggling to sell its crude oil as demand drops with fast-spreading coronavirus, especially with China as the nation’s largest buyer of the commodity the outbreak nation.

While the US has lowered interest rates by 50 basis points to support job creation and stabilise price, the state of the world’s health crisis remains a concern as the world’s central banks strive to contain further economic decline.