COVID-19: Saudi Arabia, Russia supply war propels crude oil price downturn —ex-NAPE President

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By Olanipekun Olayinka

Following the adverse effect of  COVID-19 on Nigeria’s economy  which has inturn led to the cut of national budget and   oil price benchmark from $60  to $30 per barrel, the former President Nigerian Association of Petroleum Explorationists (NAPE), Mr Abiodun Adesanya said supply war between Saudi Arabia and Russia  resulted in oil price downturn below $30 per barrel.

Reacting to the effect of COVID-19 on upstream sector, Adesanya said   coronavirus has shut down countries that consume Nigeria’s crude oil which in turn led to the shutdown of their machineries that require the Product for the generation of energy.

Abiodun said, “ Besides, Organization of Petroleum Exporting Countries (OPEC) met at the the first quarter meeting and decided to reduce   production quota.

“They then called Russia who is not a member of OPEC or who is supposed to be a friend of OPEC to get their support on it and that sparked the ego problem between Saudi Arabia and Russia that led to a price war which drove price down and we have lost 50per cent of the price, prior to that meeting.”

He added that the problem  led to loss of revenue for the country and the inability to meet so many of the budgetary projections.

The former NAPE boss reiterated that “the federal government has adjusted the  budget benchmark to $30 and my believe is that the impact of what coronavirus has done on the economy  will be covered with this new benchmark especially as it’s gradually creeping in.

“Furthermore, you know the impact always follow the action and it will look like we are surviving, but the real impact would come at the end of April, when cargoes to be lifted are no longer lifted but all over the place looking for  when we don’t have revenue”

He added that when Nigeria begins to sell on a cash and carry per joule basis it shows the effect adding that if vaccine  is got for coronavirus there would be a slack period, before things will begin to gradually creep up.

Abiodun said when things begin to get better, they will cautiously be going up and wouldn’t go up suddenly.

Also speaking on the $30 per barrel benchmark reviewed by the national assembly, he said “I think what they are doing is that they are gauging their best that in about a month time, the curves would begin to turn on this coronavirus.This implies that  the risk of the infection would begin to go down.Once it begins to go down, gradually people would be coming out of  non-productive activities and begin to produce. By the time that happens (peradventure it happens before summer), before it is cleared out that would be by the end of September and October.By  the time the overall momentum is regained towards the winter that would be December and January cargo.”

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