TheCable

Nigeria’s foreign exchange reserves have sunk to a new 11-year low, as the oil prices dwindle between $40 to $50 per barrel.

According to data from the Central Bank of Nigeria (CBN), the country’s forex reserves was down to $25,780,765,483 — a value last seen in 2005 under the leadership of Olusegun Obasanjo as president and Charles Soludo as CBN governor.

The plunge in oil prices has led to a corresponding plunge in the Nigerian forex reserves over the past 18 months.

As at Thursday morning, Brent crude, the global benchmark for oil, steadied around $50 per barrel, from about $42 only two weeks ago.

West Texas Intermediate (WTI) or US crude futures were trading at $47.10 a barrel, up 31 cents, on Thursday morning.

The Organisation of Petroleum Exporting Countries (OPEC) basket price also surged from $43.92 on Wednesday to $45.03 a barrel.

The rise in crude oil prices is adjudged to have been driven by talks of output freeze between OPEC and some non-OPEC members.

OPEC members are expected to meet in Algiers, Algeria, in September, to discuss the stability of the oil market, averting oversupply and stabilising prices.

Ibe Kachikwu, minister for state for petroleum, said in an interview with CNN that he was not optimistic about the OPEC freeze talks, as Nigeria would have to produce as much as 3.1 million barrels per day and may not maintain an output cap.

“The reality is that we have lost a lot quite a lot of months, about five, six months of continuous problems, so it is going to be difficult to catch up with the 2.2 million barrels on which the 2016 budget is based,” Kachikwu had said.

“But we are certainly going to try, once things are calmer. We need an average of 900,000 barrels per day, excess production to catch up. That is going to be very tough, but we are going to work on that.”

With rising oil prices, Nigeria’s reserves are expected to rise, but militancy in the Niger Delta region may stem the growth in reserves.