Nigeria’s economy is said to be on a road to doom, as oil price crashed even lower, thus threatening the 2015 budget and fiscal plan with international price of crude hitting a six-year low below USD 40/b and West Texas Intermediate crude oil futures as low as USD39.89, while Brent crude declined further to USD 45.10 from previous week’s level of USD48.87 per barrel. Nigeria’s sweet crude is however similar to the Brent, Sweet crude reports.

It has been foreseen that prices would crash further once Iran begins to envoy its international pardon by pumping more oil into the already saturated market spelling more doom for Nigeria, which in turn is producing less than its projected 2 million barrels daily, in so doing increasing the cash crisis and liquidity flow in the economy, with many states still unable to pay salaries.

The 2015 budget had visualized the federal government’s share to be about N3.6 trillion of total oil component revenue at USD65/b, with estimated production output of 2million bpd.

At current oil price, the component accruable to the federal government would drop massively to less than N2.5 trillion, putting the entire budget in disorder.

According to OPEC, the Nigerian National Petroleum Corporation (NNPC) cut its July official selling price for Bonny light and Qua Ibo to 10-year lows relative to North Sea Brent. OPEC also added that loading delays also hurt certain Nigerian grades as refiners looked for more consistent alternatives.

Managing Director, International Energy Services, Dr. Diran Fawibe, noted that the US market and parts of Europe are no longer Nigeria’s prime markets since the advent of the Shale oil, while the Arab producers have a better comparative advantage over Nigeria because of their nearness to the market.

He noted that what is currently happening at the international oil market is beyond government’s control, which is further exacerbated by the refusal of the Organization of Petroleum Exporting Countries, OPEC, to which Nigeria also belongs, to cut down its production quota.

According to the Global Chief Economist, Renaissance Capital, Mr. Charles Robertson, “lower oil price will be painful for the budget. It means less money is available for much-needed investment in infrastructure”.