Exporting Countries, OPEC basket of 12
crudes stood at $ 66.27 per barrel over the
weekend, compared with $ 67.31 the
previous day, according to OPEC Secretariat
calculations.
The new OPEC Reference Basket of Crudes
(ORB) is made up of the following: Saharan
Blend (Algeria), Girassol (Angola), Oriente
(Ecuador), Iran Heavy (Islamic Republic of
Iran), Basra Light (Iraq), Kuwait Export
(Kuwait), Es Sider (Libya), Bonny Light
(Nigeria), Qatar Marine (Qatar), Arab Light
(Saudi Arabia), Murban (UAE) and Merey
(Venezuela).
The prices of other crude oil grades, including
Brent which is usually used to benchmark
others also dropped from $ 70 to over $ 60
per barrel in the global market.
A source in the market stated that crude oil
prices may continue to drop in the coming
weeks as a result of increased oil supply and
weak demand.
"There are indications that prices would
continue to drop in the coming weeks
because of increased supply of crude oil and
very weak demand as a result of slow
economic growth in major consuming
nations," he stated.
Meanwhile the government has slashed the
2015 budget oil benchmark price from $ 73
to $ 65 per barrel because of the continued
fall of oil prices at the global market.
Consequently, the naira weakened slightly,
staying below the central bank's new target
band, as the government slashed the oil price
assumed in its 2015 budget for the second
time in a month.
The local currency seemed to be under
pressure as falling global oil prices have
depressed Nigeria's foreign reserves and the
central bank is attempting to keep the
currency in a new target.
The naira closed at N180.10 to the dollar,
staying outside the new target range of 160-
176 naira to the dollar, and weakening
slightly from N179.90 at Wednesday's close.
For the first time since the devaluation of the
currency, the central bank did not intervene
on Thursday to support the naira, but dealers
said that did not necessarily mean that
pressure on the currency was easing.
The cut in the government's oil benchmark
was the second in a month, from an original
estimate of $ 78 a barrel. Brent crude
continued to fall on world markets, slipping
below $ 69 a barrel over the weekend.
A much lower oil price will make it harder for
Nigeria's government to meet its spending
plans next year, stretching its already shaky
finances.
Other oil exporting countries including Russia
and Mexico have also said they expect oil
prices to be lower next year than assumed in
their budgets, which may be revised.
For Nigeria, fiscal problems risk reigniting
inflation, which has been relatively stable at
around 8 percent, and are a headache for
President Goodluck Jonathan as he seeks a
second term in a presidential election in
February.
The nation depends on oil for around 75- 80
percent of government revenues and its
finances have been hammered by a more
than 30 percent drop in oil prices since June.
The minister of Finance, Dr. Ngozi Okonjo-
Iweala said that the nation still has funds to
pay salaries and keep debt obligations, but
with crude likely to fall, the government
would increase taxes on luxury items and ban
non-essential government travel to cut
expenditure. She said Nigeria's new oil price
benchmark of $ 65 a barrel was workable. A
Reuters poll forecasts Brent will average $
82.50 a barrel in 2015.
"It ($ 65) is definitely more realistic," said
Bismarck Rewane, CEO of Lagosbased
consultancy Financial Derivatives, adding
that at about $ 12 lower than the actual
"gives them more headroom."
Posted By David Aniemeka
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