Brent crude, the benchmark for crude oil, dropped in price by 3.43% to $36.64 per barrel on Monday after some European countries imposed another round of lockdown to curb the second wave of the coronavirus.
The price of US West Texas Intermediate (WTI) also dropped by 3.97 percent to $34.37 per barrel.
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A large portion of Nigeria’s revenue comes from crude oil earnings and with the recent spate of low oil prices and reduced economic activities due to a lockdown imposed to stop the spread of COVID-19, the nation’s economy is projected to enter its second recession in five years.
The Nigerian government is already taking some proactive measures to combat the crude revenue drop, by making efforts to shore up non-oil revenue. In addition to this, the federal government has also approached lenders like the International Monetary Fund (IMF), World Bank and the African Development Bank (AfDB) for loans.
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There are speculations from oil traders that the US could impose more restrictions in the coming days as the country continues to witness record rates of daily infections.
Some countries that recently jacked up movement restrictions to curb COVID-19 include The United Kingdom, France, Greece, Germany, Belgium Austria, and Ireland. These restrictions on movement and consequent reduced economic activity in turn, lower the demand for crude oil and its refined products.
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The excess supply of crude oil in the market, without a corresponding demand, is also expected to get worse as Libya and Iraq move to bring their crude oil to the market.
In a move to stabilse the market, the Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) are already cutting supplies to the market by 7.7 million barrels per day.