‘Dire Situation’: Cash-strapped Nigeria On Brink Of Default As Oil Revenues Drop

‘Dire Situation’: Cash-strapped Nigeria On Brink Of Default As Oil Revenues Drop

By Wires | The Trent on February 3, 2016
Muhammadu Buhari Nigeria APC
Nigerian president Muhammadu Buhari, shown here on June 14 in Johannesburg, South Africa. | Mujahid Safodien/AFP/Getty Images

Cash-strapped Nigeria and Angola are discussing potential financing from the World Bank, which, together with the International Monetary Fund, is in talks with Azerbaijan.

The 70 percent drop in the crude price over the last 18 months has hit the budgets of oil-dependent nations such as Nigeria, Venezuela, Russia and even some of the richer Gulf nations such as Bahrain.

Demand for oil, particularly in Asia, proved robust last year, but not enough to absorb near-record supply and ballooning inventories of unwanted crude.

U.S. crude stocks rose by 3.8 million barrels to 500.4 million in the week to Jan. 29, data from the American Petroleum Institute showed.

“The (global) inventory situation is going to get worse in the second quarter as we hit the peak refining rate at the end of this quarter,” Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo, said.

A rebalancing between oil demand and supply will not come until mid-2017, Morgan Stanley said in a note.

“Despite the myriad announcements of capex cuts, production has yet to respond enough to rebalance the market,” Morgan Stanley said.

Goldman Sachs in a note on Monday said volatility in the oil price, which is at its highest since the collapse of failed U.S. investment bank Lehman Brothers in 2008, could reach 100 percent as storage capacity comes under pressure.

via Reuters/CNBC


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