- Foreign Reserves Surge on Higher Oil Prices
Rising global oil prices and the surged in oil production in recent months are aiding the Nigerian Foreign Reserves.
The nation’s foreign reserves rose from US$43.7 billion recorded on March 22, 2019 to US$44.43 billion by March 29, according to the data published by the Central Bank of Nigeria. Representing an increase of US$730 million in seven days.
Nigeria has been able to prop up her foreign reserves by increasing oil production.
Global oil prices rose to 2019 high on Wednesday following a report of further sanctions on Venezuela and Iran despite their recent challenges.
Brent crude, against which Nigerian oil is measured, rose to $69.73 barrel a day during Asian trading session. While the U.S West Texas Intermediate climbed to $62.84 barrel per day.
Nigeria’s oil production rose above the agreed quota of 1.685 million barrels a day in February to 1.88 million bpd. Indicating Nigeria is presently pumping more than agreed barrels.
OPEC and non-OPEC countries, known as OPEC+, had agreed to cut production by 1.2 million barrels per day for the first half of 2019. While Nigeria’s reference level was lowered from 1.738 million barrels per day to 1.685 million bpd.
But due to past challenges that impeded the nation from attaining its target between 2016 to 2018 despite exemptions from OPEC+, Nigeria is now finding it hard to cut production, especially when oil prices are trading higher.
President Muhammadu Buhari, however, said the nation could consider cutting production in support of OPEC+ efforts to boost oil prices.
He said, “As a responsible member of the Organisation of Petroleum Exporting Countries, Nigeria was willing to go along with the Saudi initiative in limiting output so that prices would go up.”
While oil traders doubt that possibility, they are less concern with a surge in Nigerian crude oil production, when Venezuela, Iran and even Russia are pumping lower numbers.
Nigeria pegged its 2019 oil benchmark at $60 per barrel and plans to pump 2.3 million barrels per day (including condensates). While Saudi Arabia pegged its benchmark at $70 a barrel.