Crude oil sold for less than $45 per barrel on Tuesday, Jan. 13, as the commodity continued its downward move since June 2014 when it sold for almost $120.
For the first time, oil has fallen to the level it was in April 2009.
The trend spells trouble for Nigeria’s economy which depends almost wholly on crude oil exports. The real sector has been emasculated by monumental corruption, inadequate power and other infrastructure.
Low global demand, booming United States shale oil production and OPEC’s reluctance to cut output are considered as reasons for the oil price crash.
Nigeria may not recover from the oil shock in the next 10 years. If the situation is not reversed in four or five months, the country’s reserves would be depleted and the federal and state governments may not be able to pay workers’ salaries. They might be forced to lay off workers and risk socio-political upheavals.
Nigeria is currently at war with terrorists and its political atmosphere is charged with the general elections expected in February. A crash of its economy portends doom for the “giant of Africa”.
