Monday, January 18, 2016

Iran's return to oil market might negatively affect Nigeria's revenue

Nigeria 2016 budget which is highly based on oil price of $38 per barrel, is already under threat as crude oil prices fell below $30 last week due an estimated 1.5mbpd excess inventory in the oil market.
Nigeria oil revenue is further expected to fall more as Iran is set to commence immediate exports of at least 500,000
barrels of crude oil per day (bpd) following the lifting of international sanctions against the country at the weekend, thus worsening the oil glut in the global market.
With the lifting of sanctions against Iran, the additional one million barrels per day that the country is expected to add to the global market this year will depress prices further, thus worsening Nigeria’s already precarious economic situation.
The United Nations Nuclear Agency on Saturday certified that Iran had met all of its commitments to curb its nuclear programme, and the United States immediately revoked sanctions that had slashed Iran’s oil exports by around 2mbpd since their pre-sanctions 2011 peak to a little more than 1mbpd.
There were strong feelers a month ago that the removal of sanctions would occur earlier than oil traders initially expected.
This fuelled a sell-off which sent the price of Brent crude tumbling 24 per cent since the beginning of the year, the biggest fall since the financial crisis of 2008.

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