Nigeria has cut its forecast for its benchmark crude oil price, citing expectations that the global oil market will be oversupplied next year, its finance minister said on Tuesday.
Africa’s largest economy is also the continent’s biggest oil exporter and relies on crude sales for around 90% of its foreign exchange. Low oil prices pushed it into a recession in 2016 from which it emerged a year later, and economic growth remains low.
Finance Minister Zainab Ahmed told journalists that she had lowered a forecast for Nigeria’s benchmark price next year to $55 per barrel from $60 per barrel, in part “to cushion against an unexpected price shock”.
Speaking as the government prepared its medium-term expenditure framework – a plan it uses to prepare Nigeria’s budget – she said the lowered price expectations were due to “strong indications” of an oversupplied oil market in 2020.
Ahmed said Nigeria is producing roughly 2.3 million barrels per day (bpd) of crude oil and condensates. It has agreed a cap of 1.685 million bpd of crude oil with the Organization of the Petroleum Exporting Countries (OPEC).
Nigeria’s petroleum minister, when asked about current overproduction on Tuesday at the World Energy Congress in Abu Dhabi, said the country will do what OPEC asks it to do.