Nigeria’s external reserves drop by $1.46bn in 3months, as crude oil output cut by 1.5mbpd

Central Bank of Nigeria (CBN) has disclosed that the country’s external reserves dropped by $1.46bn between January and March, this year.

CBN explained that the drop is connected to a reduction in crude oil out by the country.

This is also as the reserves may drop even further following a decision by the Organisation of Petroleum Exporting Countries (OPEC+) to voluntarily cut crude oil output by about 1.5 million barrels per day.

According to CBN data from figures released, Nigeria’s reserves closed February 27, 2023 at $36.67bn, just as the funds, which stood at $36.99bn at the end of January, 1, 2023, fell to $35.53bn by the end of March, 30, 2023.

At the last CBN’s Monetary Policy Committee (MPC) in Abuja in March, Mr Godwin Emefiele, the bank’s governor’s attributed the decline to the drop in crude oil price.

“The committee, however, noted the marginal decline in the level of gross external reserves to $36.13bn in February 2023, from $36.4bn in January 2023, a decrease of 0.7 per cent, reflecting the downtrend in crude oil prices, as global uncertainties persist,” he said.

According to the CBN data, Nigeria’s external reserves fell by $3.43bn in 2022, from $40.52bn as of the end of December 31, 2021, to $37.09bn as of the end of December 29, 2022.

Earlier in 2022, the CBN launched a programme tagged ‘RT200 FX Programme’ to boost forex supply in the country through the non-oil sector in the next three to five years.

Meanwhile, member nations of the Organisation of Petroleum Exporting Countries (OPEC), including Nigeria, have announced voluntary cuts to their oil production of about 1.15m barrels per day (mbpd) in a surprise move at supporting market stability.

The group of oil-producing nations had been largely expected to stick to its already agreed 2m bpd cuts when its ministerial panel, which includes Saudi Arabia and Russia, meets virtually on Monday.

Last October, Opec+, which comprises the Organisation of Petroleum Exporting Countries (Opec) and allied producers led by Russia, agreed output cuts of 2m bpd from November until the end of the year.

The United States has argued that the world needs lower prices to support economic growth and prevent Vladimir Putin from earning more revenue to fund Russia’s invasion of Ukraine.

The unexpected voluntary cuts, which start from May, come on top of those already agreed in October.

Saudi Arabia said it would cut output by 500,000 bpd while Iraq will reduce its production by 211,000 bpd, according to official statements.

The UAE said it would cut production by 144,000 bpd, Kuwait announced a cut of 128,000 bpd while Oman announced a cut of 40,000 bpd and Algeria said it would cut its output by 48,000 bpd. Kazakhstan will also cut output by 78,000 bpd.

Russian deputy Prime Minister, Alexander Novak also said on Sunday that Moscow would extend a voluntary cut of 500,000 bpd until the end of 2023. Moscow had announced those cuts unilaterally in February after the introduction of western price caps.