Falling oil prices threaten Nigeria’s earnings, reserves

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The steady rise of Nigeria’s foreign exchange earnings and build-up of external reserves, which started about five months ago, may be under threat from exogenous shock arising from the recent fall in oil prices, ThisDay reports.

Rising shale oil production in the United States in recent months has dampened production cuts carried out by members of the Organisation of Petroleum Exporting Countries (OPEC) and Russia to shore up prices.

According to Reuters, oil prices slid 2 per cent on Thursday, extending the previous session’s dive that brought prices to the lowest levels this year, as record U.S. crude inventories fed doubts about whether OPEC-led supply cuts would reduce a global glut.

Although the impact of sliding oil prices are yet to be felt in Nigeria, market analysts have cautioned that the external shocks would eventually hit the country’s foreign earnings and reserves.