The persistent increase in global oil prices bolstered Nigeria’s foreign reserves in the last seven days, according to the data released by the Central Bank of Nigeria (CBN).
Nigeria’s foreign reserves grew by $194.261 million from $38.422 billion recorded on 6 June 2022 to $38.616 billion on 14 June 2022. The amount is still below the $39.615 billion achieved on 28 April 2022.
From the year to date, the foreign reserves has declined by $1.902 billion from $40.518 billion filed on 4 January 2022. The slight rebound in the value of the reserves may not be unconnected to the recent surge in global oil prices caused by the ongoing war in Ukraine and the extended COVID-19 lockdown in China.
Crude oil is the main source of remittance into the reserves given Nigeria’s economic structure as a petrol-dollar economy. A system that relies on oil income to service its economy.
On Thursday, Brent crude oil against which Nigerian oil is priced dipped to $115 a barrel following Fed’s decision to raise interest rates by 75 basis points. However, crude oil pared losses to $117 a barrel when it became clear that inflationary pressure will not be enough to rein in crude oil demand.
According to the data published on the CBN website, Nigeria’s type of crude oil presently sells for $132.62 a barrel, substantially higher than the $117 oil in the same category being sold.