The price of crude oil in the international market fell to a seven year low yesterday just as the naira also hit an all-time low of N260 to a dollar at the black market.
This is coming ahead of a widely-anticipated U.S. interest rate increase next week and worries over economic growth.
The downward trend in the price of Brent crude oil, which saw the commodity fall below the 2016 budget benchmark of $38 per barrel as proposed by the Federal Government last week, means the National Assembly will have to come up with a new and reasonable price benchmark so as not to jeopardize government’s plans.
Reuters reported that all three major U.S. indexes sank over 1.5 percent, while crude prices plunged amid global oversupply.
The International Energy Agency said it does not foresee the oil glut getting any better in 2016 as demand slows and OPEC shows no signs of slowing production.
Brent crude was set for its biggest weekly percentage drop in over a year and U.S. crude was set for its biggest percentage decline in roughly a year.
Brent crude LCOc1 was down 4.48 percent at $37.95 a barrel after sinking to $37.36, its lowest since December 2008. U.S. crude CLc1 dropped 2.86 percent to $35.71 per barrel after hitting $35.35, its lowest since February 2009.
Some traders, who spoke to Daily Trust, blamed traced the fall in value of naira to scarcity in the market and tight forex restriction from the Central Bank of Nigeria.