Nigeria to cut budget following global oil price collapse

Nigeria will reduce the size of its record budget in response to sharp declines in the price of crude oil, according to the Ministry of Finance.

The 2020 budget figure of US$34.6 billion, adopted in December last year, was calculated assuming crude oil production of 2.18 million barrels per day (bpd) at a price of $57 per barrel.

However, the oil price collapsed to lows of $33 per barrel earlier this week based on fears of the impact of the COVID-19 pandemic on the global economy, along with the start of an oil pricing war between the world’s largest producers – Saudi Arabia and Russia.

The oil price plummeted after Saudi Arabia slashed its official selling prices in response to Russia’s failure to commit to proposed increases to an OPEC-led supply cut.

After the International Energy Agency stated on Monday that oil demand is expected to contract this year for the first time in more than a decade, Nigeria’s finance minister Zainab Ahmed said that the size of Nigeria’s budget cut would be announced in the coming days based on a new benchmark price for crude.