Revenue from crude oil to nations has continued to shrink as price of crude in the international market continue to slump.
Bonny light lost 41 cent to trade at $24.83pb Thursday. While Brent crude lost 17 cent to trade at $28.48dp, WTI Crude managed to gain 12 cent to trade at $22.68pb as at the time of filling this report.
Price of crude fallen from a height close to $70pb to the current 20s loosing around 70% of since the outbreak of the Coronavirus which crumbled major economic activities that consume oil shrinking demands to unprecedented level.
With the game war between Russia, Saudi and US, the prices have struggled to rally without success.
Economies which rely heavily on crude oil revenue have continued to think an alternative source of revenue and unfortunately, these are not short term ventures. What is the hope for Nations in this economic quagmire the world has found itself?
As a matter of fact, Nigeria has already lost an enormous amount of the projected oil revenue according to the 2020 budget which pegged oil price at $57pb. In response, the government of Nigeria has reviewed the budget downward with N1trillion. That was when prices were still hovering around 30s. Since then prices have fallen still further.
No one can predict how further the coronavirus will stress the world economy. With lockdowns on the rise, crude demand is sure to slump further and prices will respond accordingly.
Irina Slav, a writer for Oilprice.com wrote Wednesday that demand could plummet by 20million barrel per day just at the wake of India lockdown. This is expected to translate to deeper fall in price.
Aggravating the price decline is increased production by countries who tries to mitigate lower prices by increased volume.
Irina Slave quoted Vitol’s chief executive Russell Hardy who noted that more oil and oil products were being churned out than the world can consume, so stockpiles in the U.S., Europe, and India will rise, with refineries cutting output.