FSDH Says Falling Oil Price’ll Cause Macroeconomic Inflation
Nigeria was late last year hit with fuel scarcity. Image: Guardian

The FSDH Research has said that there would be macroeconomic instability on Nigeria’s economy if the price of crude oil continues to fall.

This was revealed by the FSDH in its October ‘Monthly Economic and Financial Markets Outlook: Will crude oil market receive the required stimulus,’ released on Wednesday.

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“Crude oil is important to the Nigerian economy as the major source of revenue for the government and the largest supplier of foreign exchange to the country,” the report said.

“A significant drop in either the price of crude oil or production will directly have a negative impact of the fiscal position of the country.

“It will also cause major macroeconomic instability, particularly in the exchange rate and inflation rate.”

According to the report “Despite these fairly positive developments, we are aware that the crude oil market is very volatile, therefore it is crucial to learn from the events that happened in 2014 through to 2017 in order to take proactive measures against unwarranted economic crisis in Nigeria.”

It added that “The daily crude oil production in Nigeria decreased by 0.96 per cent to 1.75mb/d in October 2018, from 1.77mb/d in September.

“This is based on secondary data available from OPEC’s report for the month of November 2018.

“Crude oil production increased mostly in UAE, Saudi Arabia, Libya and Angola while production declined in Iran, Kuwait, Venezuela and Nigeria.

“In its monthly report for November 2018, the US Energy Information Administration forecasts an average price of Brent crude oil of $73.12/b and $71.92/b in 2018 and 2019, respectively.

“The forecast is lower by $1.31/b and $3.14/b than the forecast in the October 2018 monthly report for 2018 and 2019 respectively.”