Tuesday , August 9 2022

The price of oil falls below the budget standard


By Sebastien Obasi and Adiri Age
The fall in world oil prices in the past week could shatter the federal government's economic forecasts for 2019 and negatively affect MTEF, if the trend is not reversed soon.

Figures from the Organization of the Petroleum Exporting Countries (OPEC) indicate that prices are still on a downward trend at a new low of $ 59.96 per barrel yesterday and the new price is now under the federal government's budget standard of $ 60 for the 2019 budget.

President Mohammad Buhari, Minister of Petroleum Resources, Iba Kut, Will, Minesto of State, Oil Resources Maikanti Baru, MD MD, NNPC

As a result, the budget already sent to the National Assembly is now being criticized even before it is considered a debate.

The first casualty is expected to be the nation's additional gross account, the ECA, whose National Economic Council (NEC) stood at more than $ 2.08 billion as of October 16, 2018.

As a result, capital expenditures, which constitute the main thrust of the 2019 budget and the MTEF, as well as the economic reform and growth plan, ERGP, of the current federal government may suffer downward.

Why oil prices are declining

A number of officials said they were playing. In particular, there are signs that supply is construction. The bomb-making industry is producing additional supplies, as Iranian production is still coming to markets thanks to a waiver of sanctions in the US OPEC, the producer cartel, is expected to vote to cut production when it meets next month. This expectation does not provide much relief now. Oil is also hit by a general fall in property prices this fall, and is suffering concerns that the global economy will slow in 2019.

The takeover of swollen US stocks, which remain embedded in traders 'brains, indicates that massive crude demand continues to outpace OPEC's output, although it limits traders' ambitions. The world oil and gas sector is said Lost About $ 1 trillion worth more than 40 days since October, after oil prices fell by about $ 20 a barrel. Companies listed in the US at Standard & Poor's 500 shed $ 240 billion, ExxonMobil lost $ 35 billion.

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Some analysts have warned that OPEC will have to cut output to balance the market. "If they do not cut, I assure you it's going to be all 2014 again," said Mike Bradley, executive director of energy investment firm Tudor, Pickering, Holt and company. "OPEC members are committed to achieving stability in the market because they are already looking at cutting the electricity supply by 1 million to 1.5 million at a time during their meeting in December," said Petan. Saudi Arabia and Russia are also looking at large cuts in the day. These will definitely help to take care of this low price of crude oil. "

The nightmare from Texas

The spread of points, thousands of them, represents oil wells in the Persian Gulf of West Texas and the slice of New Mexico. In less than a decade, US companies are known to have bought 114,000, many of which would also benefit from a low crude price of $ 30. The OPEC dream will only deepen next year, when Fermian's manufacturers expect a three- Million barrels of oil a day.

"The premium will continue to grow, and OPEC needs to learn to live with it," said Mike Loya, America's top managing director for the largest independent trading house in the world, the US Energy Wave presents OPEC with one of the biggest challenges in the history of 60 the last years. If Saudi Arabia and its allies cut production when they are collected on December 6, 2018 in Vienna, the higher prices will allow the bomb to steal market share. But since Saudis need higher oil prices to make money than US producers, OPEC can not afford to let prices fall.

OPEC is struggling to reduce oil prices

As uncertainty about the future of oil prices, OPEC is set to decide how to cut oil supplies to prevent further price declines Saudi Arabia is particularly troubling to the immediate explosion of OPEC producers to a daily production of one million barrels early next year Meanwhile, It leads by reducing its output to 500,000 barrels a day in December, designed to stabilize oil prices that have fallen rapidly in recent times, thereby affecting the finances of OPEC members and global oil companies. Meanwhile, analysts believe that OPEC, led by Saudi Arabia, of course, "is acting responsibly by reducing its production because it would have earlier brought online offsetting possible Iranian losses."

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