The prolonged COVID-19 has culminated in a gross reduction of economic activities globally, precipitating low oil demand and subdued prices.
THE price of Nigeria’s Bonny Light rose yesterday in the international market following the expectation that the United States’ new president, Joe Biden, would ‘act big’ in tackling the Coronavirus (COVID-19) pandemic.
But following the stabilization of post-election issues in USA coupled with the implementation of output cut back by oil producers the prices began to crawl back to pre-COVID levels late last year.
However, yesterday the prices of crude, including Bonny Light and Brent, rose to $55.31 and $56.31 per barrel from $54 and $55 per barrel, recorded the previous day, and industry opinions were hinging the ramp up on the firm start of the Biden regime which is seen set to defeat the COVID scourge.
According to Oilprice.com, “Market participants were looking beyond the first quarter, hopeful that a large stimulus package in the U.S. would result in a rebound in the world’s biggest economy, and relief packages in other economies will also help growth, and by extension, oil demand, later this year.”
At the current price, Nigeria’s fiscal position appear significantly improved compared to the last quarter of 2020, when the price of Bonny Light, had hovered at $40 per barrel.
The government also seems to be better positioned to execute the nation’s 2021 budget, which was benchmarked on $40 per barrel and 1.8 million barrels per day, mb/d, including condensate.
Nevertheless, the Organisation of Petroleum Exporting Countries, OPEC, expect that the market would continue to record a slow recovery in the remaining part of 2021.
Rising from its recent 13th OPEC and non-OPEC Ministerial Meeting (ONOMM), held via video conference, OPEC, had stated: “The meeting highlighted the unprecedented events of 2020 and shocking impact of the COVID-19 pandemic on the world economy and markets, and commended the Declaration of Cooperation (DoC) participating countries for undertaking the largest and longest crude oil production adjustments in history in response to the exceptional challenges and market conditions caused by the pandemic.”