Oil prices fell last week due to growing U.S. oversupplies and the agreement with Iran on its nuclear program, but where is oil price heading?
Sweet light crude meant for delivery in May sold for $48.68 on the New York Mercantile Exchange, representing a 19 cent or 0.4 percent price drop. Brent, the global benchmark, also dropped by 12 cents or 0.2 percent, selling for $56.29 per barrel on ICE Futures Europe.
Global oil prices started crashing in June 2014 and have now plunged by a whopping 52%. This is due to growing production, especially in the U.S., where crude oil supplies are presently at the highest level in about 80 years. According to analysts, the oversupply trend could continue into the second quarter of the year, which means oil prices could slide further.
The agreement on Iran’s nuclear program might also have an impact on future oil prices as the energy program will bring more political stability to Iran and the Mideast region in general. This in turn will result in continuous oil supply in the future, which has not been the case in the past.
Should the prediction of analysts come to pass, the Central Bank of Nigeria will most likely devalue the Naira even further in a bid to cushion the adverse effects of the oil price crash on Nigeria's economy.
Nevertheless, the trading price of oil (Brent) trades now approximately $10 above it’s low mark in January 2015. Additionally Saudi Arabia has just announced to increase its price for the Asian market by $ 1, showing some signs for optimism for oil producing countries like Nigeria.