The daily crude revenues of Nigeria fell by a whopping N4.9412 billion ($24.706 million) on Monday as oil prices fell to their lowest in seven years.
Nigeria, Africa’s biggest crude exporter, which produces about 2.3 million benchmarked the product price at $53 per barrel in its 2015 budget.
The commodity on Monday however fell to as low as $38.77 a barrel after the meeting of the Organisation of Petroleum Exporting Countries (OPEC) ended in disagreement over production cuts and without a reference to its output ceiling.
A stronger dollar also made it more expensive to hold crude positions.
The OPEC failed to agree in its policy meeting on Friday to lower production in an attempt to stem prices that have dropped more than 60 percent since June 2014.
For the first time in decades, oil ministers dropped any reference to the group’s output ceiling, highlighting disagreement among members about how to accommodate Iranian barrels once Western sanctions are lifted.
“A stronger dollar and the aftershock of Friday’s OPEC meeting are weighing on the oil market,” said Tamas Varga, oil analyst at brokerage PVM Oil Associates in London.
United States (U.S.) crude grade was down $1.20 at $38.77 a barrel, a drop of 3 percent on Friday’s close.
Brent crude prices, the globally traded benchmark, also traded down 92 cents at $42.08 a barrel at 1439 GMT and touched a low of $41.77, the lowest since March 12, 2009.
The dollar .DXY was up against a basket of currencies after jobs data published on Friday bolstered the case for a rise in U.S. interest rates this month.
Analysts at Barclays said the lack of an OPEC production target in its written announcement was a sign of discord.
“Past communiques have at least included statements to adhere, strictly adhere, or maintain output in line with the production target. This one glaringly did not,” they said.
OPEC’s output of more than 30 million barrels per day (bpd) has compounded an oil glut, pushing production 0.5 million to 2 million bpd beyond demand and putting many producers under pressure, especially small-sized U.S. shale drillers that have piled up large amounts of debt.
Analysts at Commerzbank said any recovery in prices would be dictated not by OPEC but by rising demand and a fall in production outside of the group.
“Rising oil prices next year will not depend on OPEC reaching immediate agreement or on a return to price control, as we expect prices to increase primarily on the back of continued robust demand growth and a decline in non-OPEC oil production,” they said in a report.
Saudi Arabia, the world’s biggest oil exporter, is banking on producers of unconventional oil buckling for output to fall.
Saudi Aramco Chief Executive Amin Nasser said at a conference in Doha on Monday that he hoped to see oil prices adjust at the beginning of next year as unconventional oil supplies start to decline.
In a sign that U.S. production could dip, Baker Hughes’ November data showed U.S. rig count numbers were down by 31 month on month to 760 rigs.
Others disagreed. Patrick Pouyanne, CEO of French oil company Total (TOTF.PA), said at the same event that he did not expect prices to recover next year as production growth was set to outstrip a rise in demand.
“It is not unreasonable to assume that downward pressure on prices will remain for the foreseeable future, as it will take time for low prices to materially scale back production,” Cenkos Securities analysts said.