Further bad news for Nigeria as oil price sinks to 18 year low

With the world economy in crisis, oil prices have sunk to fresh 17-year lows this morning.

Traders are ditching crude amid signs that energy demand will sink this year, just as the ongoing Saudi-Russia price war leaves the market saturated with supply.

Brent crude, sourced from the North Sea, has fallen 5% to just $23 per barrel — its lowest level since November 2002. US crude oil is also tumbling, dropping below $20 towards the 17-year low hit last week.

This extends the stunning slump in crude prices over the recent weeks – Brent crude hit $70 in January, before Covid-19 struck the global economy.

The development comes as Nigeria’s window for easy borrowing from international lenders may have further tightened following the junk rating assigned to the country by one of the leading global rating agencies, Standard & Poor’s.

The global rating agency downgraded Nigeria’s credit rating further into junk territory on weak external position linked to the oil price crash.

Nigeria has largely relied on borrowings from the international markets in recent years to fund its development programmes.

Nigeria’s long-term rating was lowered from B to B- (short-term still B) and S&P said the federal government’s policy responses are unlikely to be enough to mitigate the effect of lower oil prices which will hurt Nigeria’s external and fiscal positions and put further pressure on the foreign exchange reserve.

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