Nigeria has been in an economic tailspin ever since the price of oil started to fall in the summer of 2014. From a price of about $115 per barrel in 2014 oil prices dropped to as low as $27 per barrel.
The impact has been devastating for Nigeria as government revenues has dipped, foreign investments int Nigeria has dwindled and the exchange rate has depreciated by over 100%. For ordinary Nigerians, these all mean higher cost of goods and services, loss of jobs, no jobs and a worsened standard of living.
If there is anything we have learnt in the last 18 months, it is how oil is the single most devastating weapon for mass destruction for our economy. We have also learnt that the government has no plans to change the course of economic hardship being faced by ordinary Nigerians, except of course the price of oil starts to rise again. And so it did gain about 90% from its $27 low to a year high of about $52 in June 2016 until it began another excruciating drop. Oil price is now about $46 and dropping.
The International Energy Agency is now making us believe the a $50 plus oil price was indeed a flash in the pan suggesting that prices could fall even much further. The IEA in a recent report projects that oil prices could stay below $50 citing a clog in the market.
“Although market balance is upon us, the existence of very high oil stocks is a threat to the recent stability of oil prices….Although stocks are close to topping out, they are at such elevated levels, especially for products for which demand growth is slackening, that they remain a major dampener on oil prices”.
In other words, the market is flooded with oil ensuring that supply continues to outstrip demand. With Militants bombing our oil installations without control, Nigeria even faces a more precarious situation as our supply gap can easily be filled by another oil-producing Nation. Without oil Nigeria can’t survive as it is currently structured. All this government can do is continue to hope that the glut fizzles out.
The post above and its ensuing comments, if any, is purely the opinion of the writer(s). It therefore should never be considered as an investment advise of any sort. If required, readers should please consult a competent professional financial adviser for any investment decision.