The latest development in the international oil market may have rendered inoperative the recently reviewed oil price benchmark for 2020 budget as Nigeria’s premium crude grade, yesterday, crashed to $20.59 per barrel (pb), the lowest in 18 years.
The latest price is about 31.4 percent below the revised 2020 budget oil price benchmark of $30 pb, indicating that the Federal Government’s committee on Coronavirus impact may be forced to go back to the drawing board and effect another cut on the benchmark, barely two weeks after the first downward review.
The initial benchmark was $57 pb but the committee reviewed it downward to $30 two weeks ago following the rapid decline in global demand and price of crude oil.
Effectively the new oil price of $20.59 pb has slashed about N1.68 trillion from the original expected oil revenue as contained in the 2020 budget, a development that may force further downward review of the expenditure provisions.
But some opinions, such as that of the leader of the ruling All Progressives Congress, APC, Bola Tinubu, are calling for budget funding by Ways and Means, which entails printing more Naira notes. However, other analysts are worried that this may escalate the four consecutive months upward trend in inflationary pressure.
Other premium oil grades including Brent and WTI recorded marginal price drops, trading at $25.74 and $20.11 against last Friday price of $27.95 and $21.51. Meanwhile, industry watchers are projecting further decline in Bonny Light to below $20 as the Coronavirus, (COVID-19) pandemic continues to ravage world economy.