The global crude oil market seems not to have recovered from the fears of another supply glut as West Texas Intermediate (WTI) fell below $60 on Tuesday.
Brent crude, the international benchmark of crude oil, traded at $62; a safe place for Nigeria, whose Bonny Light oil is priced the same as Brent crude.
In the last eight days, Brent crude oil lost $5 from the $67.68 it traded at on Monday, February 5.
The Organisation of Petroleum Exporting Countries (OPEC) had to reach an agreement with non-member countries to reduce crude supply to the market to salvage the market.
The 2018 budget is not threatened by the current trading price of Brent crude, as the crude oil benchmark in the proposed budget is $45.
Rising crude oil prices had increased the landing cost of petrol meaning that falling prices would reduce the loss absorbed by the Nigerian National Petroleum Corporation NNPC).
Speaking at the just concluded West African International Petroleum Exhibition and Conference (WAIPEC) hosted in Lagos, Austin Avuru, chief executive officer of Seplat Petroleum Development Company Plc, said $80 was not a good place for oil investments.
He said when crude oil approaches $80, $90 and $100, it encourages operators to take on massive investments in unconventional sources of energy, which create glut in the oil market and crash the price
“I was telling somebody that I am praying that it doesn’t get to $80 per barrel because it will draw us out. We are safe at $60. But by real balancing what I am referring to is the fact that when the prices get to certain threshold, certain forms of unconventional become attractive and over a period of time, it crashes the price,” he had said.