NIGERIA has cut the price of every type of crude it sells in an effort to increase her share of the global oil market as part of a desperate attempt to boost foreign revenue receipts in an effort to enhance the economy.
Over the last year, Nigeria's economy has been on a downward trend as a result of falling global oil prices brought about by a glut of supply. Last year, crude oil prices were over $100 a dollar but now that they have halved, the Nigerian economy has dived into recession compared with an average growth rate of about 7% over the last 20 years.
Yesterday, the Nigerian National Petroleum Corporation (NNPC) lowered its prices by at least $1 a barrel for 20 out of 26 oil grades. Qua Iboe, Nigeria’s largest export crude under normal circumstances, was reduced by the most since 2014.
Mele Kyari, the group general manager of the NNPC's oil marketing division, said the price reductions are due to a huge cargo overhang as the country attempts to regain market share. Although shipments are gradually resuming Nigeria is seeking to become more competitive in an already oversupplied global market.
Eshan Ul-Haq, principal consultant at KBC Process Technology, said: “It is a bearish signal for the light, sweet market. In order to capture a higher share of the market, official selling prices (OSP) have to come down.”
NNPC cut the selling price of Qua Iboe for November to a 17 cent premium to the benchmark dated Brent, according to the price list, from $1.07. It reduced the price of Bonny Light Crude to a 7 cent premium and Forcados to a 41 cent discount to dated Brent.
Meanwhile, the World Bank yesterday raised its 2017 forecast for crude oil prices to $55 per barrel from $53 per barrel as members of Organisation of Petroleum Exporting Countries (Opec) prepare to limit production after a long period of unrestrained output. It estimated that energy prices, which include oil, natural gas and coal, were projected to jump almost 25% overall next year, a larger increase than anticipated in July.
This revised forecast appeared in the World Bank’s latest Commodity Markets Outlook. According to the World Bank, oil prices are expected to average $43 per barrel in 2016, unchanged from the July report.
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