IMF Predicts Oil and Gas Exports in Nigeria to Fall by $26.5bn
SWITZERLAND, MAY 01
Following the corona virus induced decline of oil demand and prices, the International Monetary Fund expects Nigeria’s oil andgas export earnings to plunge by at least $26.5bn this year.
The international financial organization agreed to assist the country with $3.4bn to cushion against the negative impacts of the pandemic on Tuesday.
The Washington based fund expresses its concern for Nigeria due to the financial risks the oil market is exposed to this period.
Speaking on the issue, the body explained that “The COVID-19 pandemic is severely impacting economic activity. The sharp fall in international oil prices and reduced global demand for Nigeria’s oil products are worsening the fiscal and external positions, as Nigeria’s oil and gas exports (84 per cent of total exports) are expected to fall by more than $26.5bn.
“The economy is projected to contract by almost 3.5 per cent in 2020, a six-percentage point drop relative to pre-COVID-19 projections.”
Large inventories of oil, yet to be sold, due to crippling demand could also stymie production. Additionally, production would likely nosedive further as oil-producing nations adhere to production cuts agreed upon by the Organization of Petroleum Exporting Countries or if prices stay below production costs.
Oil prices have plummeted rapidly as countries channel funds towards developing their health sectors and providing relief materials for citizens. Supply gluts matched with unresponsive demand has caused prices to hit a 17-year low. This creates a gloomy macroeconomic outlook for Nigeria and other nations who are solely dependent on oil for foreign revenue.
Currently, the international oil price benchmark, Brent crude stands at $26.35 while West Texas Intermediate falls behind at $19.46.