Oil down to $35 as Nigeria benchmarks at $38

Crude oil prices in the Organisation of Petroleum Exporting Countries (OPEC) basket fell to an all-year low of $35.30 at the end of Tuesday.

According to the OPEC secretariat calculations, “the price of OPEC basket of twelve crudes stood at 35.30 dollars a barrel on Tuesday, compared with $36.45 the previous day”.

This comes less than three days after the Nigerian federal executive council (FEC) set an oil benchmark of $38 per barrel for the 2016 budgetary expenditure.

Udo Udoma, minister of budget and national planning, revealed the benchmark in Abuja on Monday, while addressing reporters on the medium term expenditure framework (MTEF).

The MTEF for 2014, 2015 was initially set at $78 and later reviewed to $73, which lead to numerous uncertainties in budgetary funding in 2014 and early 2015.

In the 2015 appropriation bill however, the federal government under Goodluck Jonathan insisted on a $65 benchmark, which was reviewed by lawmakers to $54.

In the same year, the average price of crude oil stands at $52 from $96.29 in 2014.

But with current realities in the crude oil market, and the expected increase in oil oversupply in 2016, oil may sell for less way more than Nigeria’s benchmark price.

The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).