Oil prices suffered an historic collapse overnight after Saudi Arabia shocked the market by launching a price war against onetime ally Russia.
Oil prices fell as much as 30 per cent but later Brent trimmed losses slightly to be down 25.2 per cent at $33.90 a barrel, while the sell-off for West Texas Intermediate sharpened to a fall of 27.3 per cent to $30.00 a barrel.
Brent Crude Oil, which Nigeria’s 2020 budget is benchmarked against, fell from $45 per barrel to $33.49.
This is a very dire situation for Nigeria. With crude oil prices crashing and financial markets nose-diving, demand for Nigeria’s oil will wane while future deals will close at a price much lower than Nigeria’s crude oil benchmark.
US oil prices also crashed as much as 34% to a four-year low of $27.34 a barrel as traders brace for Saudi Arabia to flood the market with crude in a bid to recapture market share.
Crude was recently trading down 27% to $30.04 a barrel.
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Brent crude, the global benchmark, plunged 26% to $33.49 a barrel. Both oil contracts are on track for their worst day since 1991, according to Refinitiv.
The shock to oil also rattled stock markets, which were already in a panic because of the novel coronavirus outbreak. Market in Asia plunged during Monday trading hours, while US futures recorded massive declines.
The turmoil comes after the implosion of an alliance between OPEC and Russia, which had been restraining oil supply since the start of 2017 in an attempt to support prices.
