Nigeria and other developing countries that rely heavily on oil revenue are set to witness a decline as their income from oil and gas is projected to fall by between 50 per cent and 85 per cent in 2020, reaching the lowest levels in more than two decades.
The Organisation of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) gave the projection in a joint statement issued last week by the Secretary-General of OPEC, Mr. Mohammad Barkindo, and the Executive Director of IEA, Dr. Fatih Birol.
The projection was a fallout of the two leaders’ review of the current situation in the global oil markets, where they assessed the impact of COVID-19 and the recent broad-based financial and oil market volatility on the global economy.
However, oil prices have plummeted, as the global oil benchmark fell to as low as $29.02 per barrel.
This development, fuelled by the grave global health crisis caused by the COVID-19 and its related impacts on the stability of economies and markets is likely to have major social and economic consequences, notably for public sector spending in vital areas such as healthcare and education.
Barkindo and Birol expressed concerns about the COVID-19, which is already a grave and unprecedented global health crisis with potentially far-reaching economic and social consequences.
They discussed the inherent risks of the fast-evolving dynamics, including the most recent developments in global oil markets and agreed that these will create material impacts, particularly for citizens of developing countries, including those that rely heavily on income from oil and gas production for essential services and that are especially vulnerable to market volatility.
They also underscored the importance of market stability, as the impacts of extreme volatility are felt by producers, particularly in terms of much-needed income, and by both producers and consumers, who are affected by an unstable and unpredictable market.
Barkindo and Birol, however, emphasised the importance of finding ways to minimise the impacts of the current situation on vulnerable developing countries.
The duo agreed to remain in close contact on the matter and continue their regular consultations on oil market developments.
The OPEC had on March 6, 2020, failed to reach a deal to deepen oil supply cuts or to extend existing curbs, deepening a slide in oil prices.
Oil price slumped more than 30 per cent last week after the disintegration of the OPEC+ alliance triggered an all-out price war between Saudi Arabia and Russia, a situation that has grave political and economic consequences to the world economy.