Nigeria gets revenue boost on oil price rise, roll-out of Covid-19 vaccines

There seems to be hope on the horizon as the brent oil price is expected to average $53 in 2021, according to Fitch Solutions Country Risk & Industry Research’s latest oil price report.

Fitch Solutions also expects 2021 global fuel demand to grow by 4.6 million barrels per day after falling by 7.1 million barrels per day in 2020 as the global economy continues to recover with transport and commerce returning closer to historic pre-pandemic levels.

This is a piece of good news for Nigeria, after reporting N1.52 trillion oil revenue in 2020, the lowest in recent years.

Also, the Federal government in the 2021 budget had estimated oil price at $40 per barrel to fund its expenditure.

Read also: Oil prices hit 11-month peak as Saudi promises production cut

Already, Brent oil topped $55 a barrel last week for the first time since February 2020, as gains in broader markets added to investor optimism already buoyed by Saudi Arabia’s unilateral plan to cut output.

“Our view remains that the market will continue to rebalance in 2021, driving a continued the drawdown of global inventories and further gains in prices,” Fitch Solutions analysts stated in the report.

“In light of the muted recovery in demand, large-scale supply-side adjustments will be needed in order to rebalance the market and work off swollen global crude inventories,” said Fitch Solutions.

“Sharp CAPEX reductions are driving declines in non-OPEC supply, led by significant losses in the US shale patch. However, we expect shale production will return to growth in 2022, albeit at a reduced rate,” it said.

The Organization of the Petroleum Exporting Countries (OPEC) also said it expects a growing demand for energy due to the global roll-out of Covid-19 vaccines and will determine the price on a monthly basis.

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