Nigeria’s revenue is set to get a boost as crude oil prices continued to rally on Wednesday, with Goldman Sachs Group Inc. predicting prices will advance as high as $80 in the coming months.
On Wednesday, Goldman Sachs said it expects global oil demand to realize the biggest jump ever over the next six months, keeping its bullish forecasts for oil prices this summer.
Higher demand for travel and acceleration of vaccinations in Europe are set to result in “the biggest jump in oil demand ever, a 5.2 million barrels per day (bpd) rise over the next six months”, Reuters quoted Goldman Sachs as saying in a note to clients.
Goldman Sachs continues to see oil rising to $80 per barrel this summer, noting “the magnitude of the coming change in the volume of demand, a change which supply cannot match”, FXStreet reports.
At the beginning of this month, Goldman Sachs also issued a bullish note, saying it anticipated strong demand that would require OPEC+ putting another 2 million barrels per day (bpd) on the market in the third quarter, after the around 2 million bpd that the alliance and Saudi Arabia decided to return between May and July.
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Early April, the investment bank said it expected excess oil inventories to normalize by the fall of 2021.
At the end of April, Goldman Sachs continues to forecast a large demand rebound this year, despite the soaring COVID cases in India, which have somewhat clouded the demand outlook.
“Commodity markets have looked through the sharp rise in Covid-19 cases in India,” Goldman Sachs said Wednesday.
At the beginning of March, the bank said it expected Brent Crude prices to hit $80 a barrel in the third quarter this year, up by $5 compared to the previous forecast issued two weeks earlier.
Even after the sell-off in oil in mid-March, Goldman said that the “big breather” was a buying opportunity for oil and continued to forecast Brent hitting $80 per barrel in the summer.
Nigeria, Africa’s largest economy, is depending on earnings from oil to finance its N13.588 trillion 2021 budget.
Nigeria needs the oil price to rise and in the worst case, remain steady at any price above the $40 benchmark of the 2021 budget while also maintaining oil production estimate of 1.86 million barrels (inclusive of condensates of 300,000 to 400,000 barrels per day).
While higher crude price translates to higher revenue, it also means if the Federal Government’s pricing template is anything to go by, Nigerians may have to brace for an increase in the pump price of petrol in the coming months.
This is going to add more financial burden to Nigerians who are already complaining of the high cost of petroleum products, which has negatively impacted the price of goods and services.
