Fall in oil price, naira signal hard times for Nigeria’s economy

  • Oil prices plunged on Tuesday as the dollar rebounded in strength following fears of recession hitting the US economy
  • Oil sold below $100 as Saudi Arabia said it is going to raise prices for its Asian market in August, which has been predicted to increase the price of oil next month
  • Nigeria’s economy may be headed for hard times as oil prices dipped on Tuesday after months of bullish runs.

The prices fell very sharply as recession fears mount in the US following the rebounding of the dollar.

BusinessInsider report says that the Texas Intermediate crude dropped 8.6 per cent to $99.12 a barrel, sinking below $100 a barrel for the first time since April.

Brent Crude collapsed 9 per cent to $1O3.17 per barrel.

Oil Price, Naira, Dollar value
President Buhari
Source: Getty Images

According to reports by Washington Post, oil’s newest fall came as Citibank said that prices could sink further to as low as $65 per barrel if demand slows globally.

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Naira records biggest fall to US dollar at official market despite Nigeria’s massive foreign reserves rise

The dollar regained strength on Tuesday, July 5, 2022, as the US Federal Service raised interest rates in response to high inflation never seen in 40 years.

However, oil is selling at a high price in some markets as Saudi Arabia’s state-owned producer, Aramco, said it will raise prices in August for its Asian markets.

Energy policy expert Johnson Ifechukwu said the recent flop in oil signals a difficult period for Nigeria as the local currency weakened on Wednesday, falling lowest since the beginning of the year.

Ifechukwu told Legit.ng that what the fall in oil price portend for Nigeria is that the country will cut down on some expenditures like welfare and capital projects.

He said:

“I think its serious sign that there will be trouble ahead for the economy. The price of oil is down and the naira is down, I do not know what magic the Nigerian government can perform to keep the economy steady, seeing that we have a government that almost never tweak of rejig plans.”

Read also

Oil rises after sell-off but euro stuck at 20-year low, equities drop

Naira records biggest fall to US dollar at official market History, despite Nigeria’s rising foreign reserves

Recall Legit.ng reported that the Nigerian currency has dropped to its biggest low to the US dollar in the last seven months at the official market, and it could get worst in the coming months.

FMDQ securities data shows that at the official market, Naira on Tuesday closed at N430, which is a N4.25 or 0.99 percent devaluation from N425.75 posted in the previous market session on Monday.

The last time Naira exchanged at N430 or above was Thursday, 30th December 2021, at the official market.

Source: Legit.ng

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