Crude oil price below $65 uncomfortable for Nigeria – Kachikwu

Nigeria’s minister of State for Petroleum Resources, Ibe Kachikwu, says that Brent crude oil price below a $65 mark will be rough for Africa’s largest economy thus, expects the price to remain well at the $70 dollar range through till next year.

“I like the feel of crude oil prices staying around $70 which is where it is hovering. However, I am very uncomfortable if it goes below $65 especially from my country Nigeria perspective at a time like this that we need all the money that we can get” Kachikwu said on a side-line in an interview with Bloomberg, at the on-going 2018 Forum on China–Africa Cooperation (FOCAC).

Kachikwu also said that he sees momentum shifting in favour of keeping OPEC’s supply cuts well into 2019 if prices stay within the mid-70’s range. However, he fears that if oil prices get as high as $80 it would increase the momentum from consumer nations to take rift actions.

Nigeria’s average daily crude oil production dropped to 1.84 million barrels per day in Q2 2018, from the 2.00 million barrels produced in Q1 2018 and the 1.87 million barrels recorded in the same period last year when the country managed to limp out from recession.

Kachikwu noted that the decision to raise or cut production volume would be largely dependent on the prices of crude in the international market.

“If prices remain in the seventies, definitely what you are going to find is that everybody will say leave it as it is,”

“We struggled with that decision in June, but if come December, prices go up northwards dangerously, we begin to foresee reactions, we expect reactions from President Trump and his team, so when we begin to see that, we probably going to see a loosening up of volumes.

“If prices go southwards, we are going to firm up on those, like you know Russia itself is also a bit weary on how long that can continue because everybody has its own internal drive – Saudi Arabia, to some extent also.

“How long we keep this going is going to be a balancing act between how well the buoyant prices make up for the loss of volumes,” he added.

On the US and China trade war, Kachikwu said China’s economy would continue growing in spite of the tensions with the US.

“China is going to continue to grow, the population guarantees that the economy guarantees that, the relationships they are building guarantees that. What is opening up in terms of small consumption nations in Africa also guarantees that” he said.

“If anything, it will positively impact the price of oil. The more of these fights you have, the more you are going to find oil prices go up.”