(4 minutes read)
· Africa’s largest economy-Nigeria- had reported a rebound ofoil price to the highest level in two months. In the meantime, thepandemic had its toll on the economy, presenting mixed prospects forthe economy.
· Crude prices climbed past US $42 a barrel after OPEC+ cutsstarted taking excess supplies from the market.
· Oil is the mainstay of the Nigerian economy bringing in 90%of foreign exchange.
Africa’s largest economy-Nigeria- had reported a rebound of oil price to the highest level in two months. In the meantime, the pandemic had its toll on the economy, presenting mixed prospects for the economy. Crude prices climbed past US $42 a barrel after OPEC+ cuts started taking excess supplies from the market. Oil is the mainstay of the Nigerian economy bringing in 90% of foreign exchange.
Members of the OPEC+ group accuse Nigeria for not following strictly the reductions in oil production to shore up the sagging prices. If oil prices stabilize close to the current levels until the end of the year, the country can gain substantially and improve
its public finances. For instance, a10% rise in the full year’s average crude price above the company’s current forecast of US$35 per
barrel would improve Nigeria’s current-account deficit by about 1.5% of gross domestic product, analysts point out
Yields on Nigerian bonds maturing in 2047 fell from an all-time high of 13.2% on March 19 to 8.6% on Friday, thereby reducing to some
degree investor concerns. This development will help the country to realize more resources from the international bond market, in case the country tries to tap that source. Earlier, Nigeria has ruled out going to international bond markets this year. Though the purchasing managers index of Stanbic IBTC Bank and IHS Markit’ rose last month, it remained below 50, suggesting the economy will shrink in the second quarter.
