omenka:
Very bad news for oil dependent economies, worst of all Nigeria since we refused to save enough to use as buffers under such a situation.

Now Iran would flood the IOM with its crude driving oil prices even lower- I foresee it dipping below $10pb.

Even if we saved....at best we would have reached $70-100bn.

Last year....Saudi Arabia spent $124bn to prop up their currency.

We would have just postponed matters by a year. The Saudis that have $600bn left are over-worried.

Seun:
This means the oil price will drop further since Iran is now free to export their oil to US and all European countries. The naira will also drop.

Oga Seun wetin we go do nw? because walai me i don tire o!

smitez:



You are very funny.

Do you realize the impact it would have on the american economy if they can make their shale cheaper than oil and more available? It would sky-rocket their economy, and this is their Goal. I don't see them giving up until it is accomplished. What you don't realize is all none-oil exporting countries are all hoping for a better alternative to oil.

Shake oil is not an alternative to crude oil. Shale oil is also crude oil. Shale just refers to the new technology they are using to extract more crude oil which is different from the conventional drilling method.

ladyF:

the low prices is driving a lot of companies out of business. A lot are making losses, no new exploration. At the end of the day, with this current prices, it will get to a point where a lot of people will stop production because it is not sustainable, hence supply will certainly fall.

The truth is the low oil prices cannot last forever. Everybody is bearing the brunt, big & small companies inclusive. It is just not sustainable.

it's not actually driving them out of business, alot are still drilling, some smaller ones merged, and giants like Mobil, Chevron e.t.c are taking over smaller ones. Lean business methods are being applied. This has really helped them to stay afloat. Technology also keeps getting better.

Pidggin:
The God of Goodluck is after PMB

I guess his god is equally after all OPEC member countries and the global economy.

And why would OPEC impose sanctions on the US for production when the US is not a member of OPEC? OPEC is a oil cartel and not a regulator so I don't even see how that will work.

I know oil prices are crucial for the likes of Nigeria and other oil producing countries but let's take a step back and look at it from a global economic perspective. Lower oil prices is beneficial to the many non oil producing countries e.g. China, India etc and the oil producing countries had their fun during the oil boom.

The high oil price of the last few years have made us feel entitled in Nigeria like it is our right for oil prices to be high. No it is not our right. Oil is a commodity and will rise and fall based on demand and supply. I don't recall the oil importing countries shouting when prices rose over the last few years.

mazeltov:
I don't have problem with this news. We all know that one day, the sanctions against Iran would be lifted. Of course the sanction can't everlasting as some people think.
My concerns focus on the weakling 'OPEC' organisation.
Honestly since the creation of Opec, I am yet to see its usefulness to the global oil market. I thought Opec would serve as a regulator to regulate these gluts. Sometimes we need to leave the players and blame the coach.
Opec is just too weak to control the output of crude oil into the global market. At least, Opec should be strong enough to impose sanctions on some giant countries like United States or even Venezuela if they outstep their production.

omenka:
You have a point but are you aware oil producing states that are non-member states of OPEC account for over 60% of world oil production? This means that even if OPEC seals off all its wells, over 60% of world's demand for oil could still be met!

The only way they might have exerted the leverage you imagine is if they have had monopoly of if they were responsible for an overwhelming fraction of world's total oil output. But they don't, hence, their weakness and inability to regulate supply, and by extension, price.

Furthermore, if they have had that sort of influence and used it as you propose, that could have even more dire consequences for countries that depend on oil exports for forex. Such arm twisting techniques could push big consumers to develop alternatives (they have the technological know how to do so) to oil, thereby ultimately rendering the "liquid gold" useless!

I believe there are some benefits to being a member of OPEC, but right now, in the light of the prevailing circumstances, those advantages nearly totally insignificant.

AT the bolded.....OPEC is no longer powerful. Period

Everybody and his mother is discovering oil.

Too bad Nigerians....not just the governments past and present ....cannot see life beyond oil.

buJu234:
We may be coming to the beginning of the end of the crude oil industry although the gas industry still have a good future.

Crude oil may soon be like coal.

Nigeria don't Jst learn from her past mistakes

Do u remember the Austerity measures of the 1980s... Cos by crude oil prices of abt $10 per barrel.

I don't see any indication of demand increasing soonest; the only hope now is if the Chinese government decided to introduce any economic stimulus package jst like in 2009-2010 worldwide recession.

Nigerians should jst brace up for hardtimes... It's not lack of faith but getting the results of living a planless wasteful & visionless country.

you are right. I watched on CNN yesterday that the US now has more workers in the solar energy industry than the oil industry.

Kikero112:


Even if we saved....at best we would have reached $70-100bn.

Last year....Saudi Arabia spent $124bn to prop up their currency.

We would have just postponed matters by a year. The Saudis that have $600bn left are over-worried.

They could be worried because their financial obligations far outweigh that of Nigeria. The same way a country like US would be worried if they had $10trillion only in their reserve. Understand?? Our needs are unique to us, hence our divergent responses to situations.

If Nigeria could lay hands on such an amount today (), our problems would be solved overnight literally.

smitez:


Even a madman knows that was Americans intent all along.

So, how does using common sense become "mad". You think everyone thinks like Nigerians. They don't want to depend on oil producers anymore and they stepped up their oil production. How is that a bad thing?

snailspeed:


All this joke comments you make is good for AY show. What has Buhari ever managed in his whole life? He can't even improve his personal knowledge after 30 years and calls Germany, western Germany. Is he not the same president that presented a corruption laden budget to settle his party cronies you are saying would have managed us well? The same one that is so incompetent that a national budget just got so messed up and the country ridiculed before the whole world? The same Buhari that hasn't even improved one thing since he came on and has continued to make a mockery of governance and leadership? No wonder he has to try to use a fake anti corruption fight to divert attention.

The man is there now and is a theatre of comedies. You don't need to throw any assumption or conjecture. His leadership skills are already on display and it is a tale of woes. A calamity. The lowest point this country has ever sunk. Look at his economic team. Is this the team that would have saved this country? This accounting 101 finance minister and her band of Dundee's? I will like to have some of that thing you are having...

No vex abeg, please forgive whatever PMB has done to you.

we need to keep this thread sane and lets see what can come out of it

Bitterness is not good for the heart

Abeg, no vex

omenka:
Brother, you seem to grossly underestimate the capability of the agric sector. Look, if properly harnessed, it can propel the economy completely out of its current deplorable situation. Beauty of it is that one doesn't need formal education to be successful in it, unlike in the oil and gas industry- just about everyone can get involved in it. Now just imagine all that!!

Commodity prices are down because of the slow down of the Chinese economy. We can only farm to feed but for trade..... Forget it until 2020.
International Agric business are done years ahead based on orders and I don't think we have such for now.
Agric Wil continue to sleep until marketing boards are brought back so that farmers would know before the commence production the guaranteed market price.
Secondly, our use of land would have to be reviewed because agricultural lands are shrinking. Where u currently built ur house was most probably a farm land due to massive urbanization. Residential areas should be well mapped out, encourage the building if sky scrapers or high rise buildings to minimize land use
Agric has gone through modernization so lot of know how is involved. Let's do lot of research on hybridization, short duration crops & extension services with private sector involvement.
My doubt Is apc is a socialist oriented government which would have its hands tied.

omenka:
Very bad news for oil dependent economies, worst of all Nigeria since we refused to save enough to use as buffers under such a situation.

Now Iran would flood the IOM with its crude driving oil prices even lower- I foresee it dipping below $10pb.

No thanks to those pot bellied governors that won't allow the previous administration save our excess crude earnings! Sad...

omenka:
They could be worried because their financial obligations far outweighs that of Nigeria. The same way a country like US would be worried if they had $10trillion only in their reserve. Understand?? Our needs are unique to us, hence our divergent responses to situations.

If Nigeria could lay hands on such an amount today (), our problems would be solved overnight literally.

All true...but still if we had $600bn in our account.....and I was the finance minister....I would still be worried.

Because....I am not being paid to be happy about the good times in the present...I am paid to worry about future worst case scenarios and how to deal with them.

And then there is the fact that oil prices are going to stay low. The optimists say that it would shoot up by 2017. Me? I am prophesying that oil is not going to shoot up again. The US is now the world's largest producer of oil(SHE who used to be the world's largest net importer)....and it is not in OPEC.And no matter what the Saudis do...the Americans are not going to give up on their dream of self sufficiency in energy.

(That is why I really hope the corruption war continues. The theives are stealing from a tiny treasury ).

All in all....beyond saving....Nigeria needs to diversify. Oil is not going to go up again.

hahn:


Bro, can you help me out? I was just wondering, why is it that the drop in the price of crude oil is not reflecting in the price of it's refined products especially here in Nigeria?

It's very simple my brother, Strength (value) of Nigeria Naira is dependent on price of crude oil in the international market. The fall in the international oil price that we would have enjoyed, being importer of refined oil, has been eroded by fall in the value of Naira. For instance, if Naira value has not fallen (assuming Naira is not only relying on prize of crude), there would have been drastic reduction in the pump price.

Lighthouseman:

Commodity prices are down because of the slow down of the Chinese economy. We can only farm to feed but for trade..... Forget it until 2020.
International Agric business are done years ahead based on orders and I don't think we have such for now.
Agric Wil continue to sleep until marketing boards are brought back so that farmers would know before the commence production the guaranteed market price.
Secondly, our use of land would have to be reviewed because agricultural lands are shrinking. Where u currently built ur house was most probably a farm land due to massive urbanization. Residential areas should be well mapped out, encourage the building if sky scrapers or high rise buildings to minimize land use
Agric has gone through modernization so lot of know how is involved. Let's do lot of research on hybridization, short duration crops & extension services with private sector involvement.
My doubt Is apc is a socialist oriented government which would have its hands tied.

Exactly.

Anytime i hear someone sing ''Agric will save us''....I always get the feeling the chap is still in the 1960's....when we had guaranteed markets.Not anymore.

And then there are the African countries that do rely on agric...most of them are heavily reliant on loans to fund their budgets.

And your point about modernisation?....Fully taken. Anyone who thinks we can be a major agric exporter on the backs of subsistence farming..with 10% of our farming done on not so modern mega farms is just dreaming.

Bishops10:
who read all those things up there?

if it was don jazzy and olamide news you go rent house for the page dey read dey go,.... Grow up kid!..i doubt if you know the implication on Nigeria crashing economy.

omenka:
Very bad news for oil dependent economies, worst of all Nigeria since we refused to save enough to use as buffers under such a situation.

Now Iran would flood the IOM with its crude driving oil prices even lower- I foresee it dipping below $10pb.

it won't reach 10...What is the cost of production? Oil has an inelasticity of demand effect, meaning that the price is not affected much by quantity supplied.

If opec (which Nigeria and iran are part of) wants to increase oil price tomorrow, they will.

The problem with the oil price is with US and their shale oil.

poseidon12:

Shake oil is not an alternative to crude oil. Shale oil is also crude oil. Shale just refers to the new technology they are using to extract more crude oil which is different from the conventional drilling method.

You totally missed my point.. which was and still that America would try its best to reduce the cost of production of its oil, then reduce the price, oil importing countries should have no choice than to buy from them thereby increasing their economy.. As at when last I checked, America was the largest producer of oil.

ONE THING MANY FAIL TO UNDERSTAND IS THE FACT THAT SOME WORLD POWER NATIONS LIKE USA, RUSSIA, JAPAN, CHINA ARE BEING TREATED BY BRIGHT FUTURE OF THE LIKE OF NIGERIA, SOUTH AFRICA ETC AND WILL DO ANYTHING POSSIBLE TO MINIMIZE THEIR FEAR.
UNFORTUNATELY WE HAD A PRESIDENT WHO SOLD OIL AT $110 AND ABOVE PER BARREL, YET LEFT AN EMPTY TREASURY BEHIND.
TYPICAL OF EDUCATED ILLITERATES, NIGERIANS WILL EXPECT THE MAN WHO MAY END UP SELLING OIL AT $20 OR LESS PER BARREL TO SOLVE THEIR PROBLEMS IN ONE DAY.
THIS IS NOT A GOOD TIME TO HOLD CASH.

phlamy:



No vex abeg, please forgive whatever PMB has done to you.

we need to keep this thread sane and lets see what can come out of it

Bitterness is not good for the heart

Abeg, no vex

I no vex bro. I just responded to Omenka's claim that the last government did not save and Buhari would have saved the planet. You know he and his kind have a fixed answer to everything: the last government!

This thread can be informative at best. It isn't going to come up with a solution to the oil crisis. The prices will keep going down and the consequences will be far worse than many might imagine. There will be another global recession. Many countries in Europe and the mideast will go burst like Greece. The only thing that can give us a little succour if we act now is true federalism. The Nigerian structure as it is is flawed and can never produce a 21st century robust country

Kikero112:


Exactly.

Anytime i hear someone sing ''Agric will save us''....I always get the feeling the chap is still in the 1960's....when we had guaranteed markets.Not anymore.

And then there are the African countries that do rely on agric...most of them are heavily reliant on loans to fund their budgets.

And your point about modernisation?....Fully taken. Anyone who thinks we can be a major agric exporter on the backs of subsistence farming..with 10% of our farming done on not so modern mega farms is just dreaming.

With the buhari budget where communication and propaganda ministry gets 10 billion more than Agric then we are in for a long thing because it means the government will feed us more with propaganda and less food

my understanding of it is as follows:

Oil companies within the United states are producing oil domestically [shale oil]
this has reduced the US demand from foreign countries
Saudi Arabia is trying to destroy the shale oil industry by flooding the market with oil, thus forcing the price down, until shale oil exploration is not profitable
the aim of this is to return to the status quo.
Saudi Arabia has the reserves to take the long view.
unless more technology that can further reduce the cost of shale oil prospecting is developed, exploiting shale oil may not be economically viable at $30 or less.

so saudi will continue to flood the market until shale oil is dead
by doing so, they are also fking with iran's earnings
nigeria , venezuela, and oil companies in general are collateral damage

but even if Saudi effectively kills shale oil, Elon Musk has disrupted the industry. Tesla is a raging success, and everyone is developing electric cars. unless theres some other major source of energy that oil provides, the demand for oil will die within the next 2 decades

if nothing else, properly harnessed agriculture will lead to some form of self sufficiency

we import too much. the cost of dollars means that we are importing processed foods from countries other than us/uk. i am seeing jam and ketchup made in pakistan in supermarkets. if ketchup can be made in Pakistan, why not nigeria?

It's not going to rise soon an definitely not going back to the $100 + anytime soon.

ladyF:
The oil price would certainly come back up, it's not the first time we are seeing a nosedive like this. World supply is getting shortened as some production facilities have been shut. It's only a matter of time before the market would start experiencing an undersupply that will drive the prices up eventually. Simple economics!!!!

[size=15pt]LadyF[/size] is here again

Observant:
The Lord that answerth by fire..... He will be my Lord.

Best news since 2016, I hope it plunges down to $5 per barrel so my joy will be complete.

You took it out of my mind. I am most elated by this development. I have been beaming with smiles. My parents worked hard to earn their living and here I am working so hard and diligently to earn mine too but some people are sitting idly in offices stealing our common wealth. They make those working look stupid.the day of reckoning has finally caught up with Nigeria. Thank God its happening in my time but it is never too late for lazy bones and looters only that they will be dazed with the challenges they will meet while starting afresh. Una ntorrrr

Actually Iran selling oil benefits the world economy, it's oil producing nations that are suffering especially those who depend on oil revenue.

Oil importing countries like China India and many others are loving the low oil prices in fact India dictates conditions to buy your oil. Gas prices very low in the US so benefits consumers and other sectors who need to use fuel as it reduces costs.

ViktorMartins:
If Iran starts selling, what hope does the world at large has? We need to prepare for the worst as it is

Bollinger:


So, how does using common sense become "mad". You think everyone thinks like Nigerians. They don't want to depend on oil producers anymore and they stepped up their oil production. How is that a bad thing?

Who said that was a bad thing? I appreciate smartness when I see one.. America is Smart.. not only are they driving countries like Russia that depend on oil to some extent economy down, they are also alleviating their own.

Bishops10:

Ok sir

But







The kids will still grow to start from where the so called adults stopped

ALL the more reason "TO READ ALL THOSE THINGS UP THERE"

Akathriel:
Forget about Oil, this is a very good news. Israel is about to become a Nuclear wasteland.

@Palestine - Get ready to be independent!

Listen to yourself. Nigeria is about to be smitten by poverty and you are happy that it also means Israel MAY be levelled by a nuclear warhead.

Israel has anticipated this and has been working towards it for years now. Knowing how intelligent they are, I daresay Iran will be shocked if they try anything funny.

smitez:


Who said that was a bad thing? I appreciate smartness when I see one.. America is Smart.. not only are they driving countries like Russia that depend on oil to some extent economy down, they are also alleviating their own.

Sorry. I misunderstood.

That is the expecttion, but I think that the actual amount maybe smaller. You see the Iranians were selling their oil, via trucks within their region, yes even during the sanctions. This is well documented. Thus the actuam impact may not be that much. The main issue are the reserves and most importantly the Saudi standpoint. You see the Saudis wanted to destroy the Shale oil production but making it costly. The hoped that buy over supplying and pushing the price down they would drive Shale producers out of business. That has backfired a bit. Also note that US has started to become a net oil exporter for the first time in many years and China growth is slowing so less use. Yes we could see as low as $25.

As for the Naira, this will fall further and I see a N/$ at 400-450 at year end. I would explain how I go to that, but will spare you my boring calculations.

Seun:
This means the oil price will drop further since Iran is now free to export their oil to US and all European countries. The naira will also drop.

Academicwizman:


It's very simple my brother, Strength (value) of Nigeria Naira is dependent on price of crude oil in the international market. The fall in the international oil price that we would have enjoyed, being importer of refined oil, has been eroded by fall in the value of Naira. For instance, if Naira value has not fallen (assuming Naira is not only relying on prize of crude), there would have been drastic reduction in the pump price.

Thanks for your response. The thing is, this explanation sounds too obvious. I appreciate your reply though