Oil: Buhari, Emefiele, Kyari, others meet — Price crashes to $33, loses $11 in hours

The President, Major General Muhammadu Buhari (retd.) and officials dealing with government finances on Monday, met in Abuja.

Those attendance were the Minister of Finance, Budget and National Planning, Zainab Ahmed; Minister of State Petroleum Resources, Timipre Sylva; and the Minister of State, Budget/National Planning, Clement Agba.

Other officials of government attending the meeting included the Governor of the Central Bank of Nigeria, Godwin Emefiele; and the Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari.

The meeting came amid crashing crude oil price which crashed to $30 per barrel as of Monday.

The outbreak of Coronavirus in China and its rapid spread to many countries around the globe is seen as the major factor responsible for the dip in crude prices.

The country’s 2020 budget had its oil benchmark pegged at $57 per barrel.

The crash in price may have left the Federal Government in a quandary on how to fund the N10.59trillion, which already came with a deficit of over N2tn.

It is worthy to note, that the international oil benchmark, Brent crude, which stood at $45.72 per barrel on Sunday, has slumped to $33 per barrel suffering an historic collapse overnight after Saudi Arabia shocked the market by launching a price war against onetime ally Russia.

Brent, against which Nigeria’s crude is priced, fell by $11.62 to $33.45 as of 9.00am Nigerian time on Monday. It earlier dropped to $31.02, its lowest since February 12, 2016, according to Reuters.

Traders are bracing for Saudi Arabia to flood the market with crude in a bid to recapture market share, according to CNN Business.

Last Friday, negotiations between the Organisation of Petroleum Exporting Countries and its partners broke down.

Russia, the leader of the 10 allies, adamantly refused to go along with a plan for deeper crude production cuts to tackle the coronavirus’ impact on global oil demand.

Brent, which has been on a downward trend since the coronavirus broke out, fell by $3.84 to $46.15 per barrel as of 8:10pm Nigerian time on Friday.

OPEC had on Thursday revealed a plan under which it would slash its production quotas by an additional 1 million barrels per day for the rest of the year, contingent on Russia and nine other non-OPEC allies agreeing to shrink theirs by 500,000 barrels per day.

Oil prices were already stuck in a bear market because of the coronavirus outbreak that has caused demand for crude to fall sharply.

But then Saudi Arabia escalated the situation further over the weekend. The kingdom slashed its April official selling prices by $6 to $8, according to analysts, in a bid to retake market share and heap pressure on Russia.

Nigeria premised it 2020 budget on oil benchmark of $57 per barrel.