Crude oil prices fell significantly in August 2024 – OPEC
According to the Organisation of Petroleum Exporting Countries’ (OPEC) monthly report on crude oil movement, crude oil prices fell significantly in the global market in August 2024. The report shows that the OPEC Reference Basket (ORB) value dropped by $6.02 (7.1%) from $84.43 per barrel in July 2024 to $78.41 per barrel. Similarly, ICE Brent decreased by 6.0% ($5.00) month-on-month (m-o-m) to $78.88, while the New York Mercantile Exchange (NYMEX) West Texas Intermediate (WTI) declined by $5.02 (6.3%) m-o-m, averaging $75.88 per barrel.
The Nigerian Bonny Light also fell by 4.7% ($3.93) m/m, dropping from $83.96 in July to $78.39 in August 2024. The fall in crude oil prices resulted from elevated volatility in the global market, largely influenced by substantial sell-offs from non-commercial participants, including hedge funds and other money managers, who maintained an increasingly bearish outlook on crude oil prices. Given Nigeria’s heavy reliance on crude oil exports, the decline in prices is likely to result in reduced government revenue, leading to budget deficits and decreased spending on infrastructure and social services.
Additionally, reduced oil revenues would negatively impact foreign exchange reserves, increase public debt, and limit Nigeria’s ability to meet international payment obligations. Therefore, the government should invest in the growth and development of non-oil sectors such as agriculture, manufacturing, and services to reduce overreliance on oil exports. Moreover, encouraging the local production of petroleum products is crucial to ensure reduced prices from the sale and consumption of domestically refined petroleum, as well as to eliminate product scarcity. SOURCE: CSEA AFRICA
