Chineme Okafor in Abuja
The outbreak of the Covid-19 is expected to push down the oil revenue of Nigeria and other developing countries who rely on oil to fund their public spending, by up to 85 per cent, the Organisation of Petroleum Exporting Countries (OPEC) and International Energy Agency (IEA) have said.
This is however on the condition that the situation fails to improve, and the global economy further weakens.
The OPEC and IEA stated this on the back of the meeting of their heads: the Executive Director of the IEA, Dr Fatih Birol, and Secretary General of the OPEC, Dr. Mohammad Barkindo.
A statement from OPEC explained that both leaders spoke by phone to review the current situation in global oil markets and expressed deep concerns about the grave global health crisis caused by Covid-19 and its related impacts on the stability of economies and markets, notably in developing countries. The two leaders according to the statement expressed deep concerns about the virus which they said was already a grave and unprecedented global health crisis with potentially far-reaching economic and social consequences.
It explained that Birol and Barkindo assessed the impact of the virus and the recent broad-based financial and oil market volatility on the global economy and particularly discussed the inherent risks of the fast-evolving dynamics, including the most recent developments in global oil markets.
“They agreed that these create material impacts, particularly for citizens of developing countries including those that rely heavily on income from oil and gas production for essential services and that are especially vulnerable to market volatility.
“Dr Birol and SG Barkindo reviewed the impact on vulnerable developing countries and noted that if current market conditions continue, their income from oil and gas will fall by 50 per cent to 85 per cent in 2020, reaching the lowest levels in more than two decades, according to a recent IEA analysis,” it said.
“This is likely to have major social and economic consequences, notably for public sector spending in vital areas such as healthcare and education,” the statement added.
According to the statement, both leaders underscored the importance of market stability, as the impacts of extreme volatility are felt by producers, particularly in terms of much needed income, and by both producers and consumers, who are affected by an unstable and unpredictable market.
“SG Barkindo and Dr. Birol emphasised the importance of finding ways to minimise the impact of the current situation on vulnerable developing countries. They agreed to remain in close contact on the matter and continue their regular consultations on oil market developments,” it noted.