by Sanya Ademiluyi
The heavy pall cast by the sudden collapse of international oil prices a forthnight ago and the ensuing market turmoil, began to lift off the market this week. One piece of good news which may have cheered the market was the gradual re-opening of several economies round the world which shell-shocked by the covid-19 pandemic had shutdown their economies since early March.
This week, New York gradually eased its lockdown. Nigeria too, eased a lockdown that had crippled social and economic activities at its key cities such as Lagos and Abuja and Port Harcourt.
And by this week the 10 million barrels per day output cut agreed by Opec+ and other producers was expected to kick in, even though the oil markets had taken a turn for the worse after the output cut agreement reached in April.
Nigeria in particular would look anxiously towards India and China its two biggest oil buyers. China had two weeks ago began restarting its production lines which supply roughly 25 % of global production of goods, while India another booming industrial tiger may begin to stir this week as the Modi administration eases lockdown restrictions in the country.
Since mid-February , several of the country’s oil cargoes have been stranded at sea ,undelivered to several markets, according to Mele Kyari, Group managing director of the state owned Nigerian National Petroleum Corporation, NNPC .Kyari counted 26 cargoes in March but these numbers reportedly increased in April, as oil markets continued to reel under the near zero demand due to covid19 lockdowns in major cities round the world.
Officially, the country agreed to cut its oil production to 1.4 million barrels per day this month, from 1.8 million barrels per day in March .Even so, such cuts will be easier as there is an existing glut in global oil markets already.
Nigeria had expected to ramp up its oil output to an ambitious 2.2 million barrels per day on oil prices of $57 per barrel. All that is gone with the wind in the wake of Covid-19 pandemic.
Finance ,Budget and Planning Minister, Zainab Ahmed said the government was likely to put forward a new oil price benchmark of $20 per barrel, down by over 55 per cent from $55 per cent proposal and a revised $30 last month.
NNPC sources said the country may still get some leeway under the Opec quota agreement for its condensate production which is typically excluded from the quota regime. Nigeria condensate output is between 350,000 to 400,000 barrels per day. Still,the terribly weak demand in major global markets is the key issue for major oil producers including Nigeria..
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