OPEC and its allies are reporting almost full compliance with a production quota agreement reached in November 2017 at Vienna. This together with the disruptive effect of the Iran sanctions had propelled oil prices to a 54-month high of $86.74pb, forcing Donald Trump to tweet in protest.
However, recent anxiety about slower growth in advanced economies is beginning to negatively impact commodity prices including oil. In the last week, Brent fell 5.8% to $81.28pb on fears of a slowing world growth especially in advanced economies.
The rise in oil prices even though good for revenues, growth and the external reserves raises the spectre of record level petroleum subsidies in Nigeria reaching $5bn in 2018. This will blow the lid off the fiscal deficit and may force the country into a short term funding crisis. Therefore, policy makers are slow to celebrate higher oil prices until they can curb what is looking like another subsidy scam or scandal.
In this edition of the FDC Bimonthly publication, the Think Tank analyses these issues and their implications on the economy, business performance and investment decisions.
Enjoy your read.