Oil Price Apocalypse Amid COVID-19 Lockdown Nigeria on the Verge of bankruptcy, Africa’s Richest Nation

With oil prices falling below zero dollars per barrel, it's only a matter of time before Nigeria's debt-ridden government goes bankrupt.

Nigeria is slipping toward economic collapse that could include a devalued currency and soaring inflation as oil prices go negative. | Source: Yasuyoshi CHIBA / AFP

• Oil prices have fallen to all-time lows with some benchmark futures trading for less than zero.
• Nigeria’s Bonny light hasn’t fallen into negative territory yet. But the country is still generating massive losses on every barrel of oil it produces.
• After decades of mismanagement with government policies, Nigeria is on the road to a Venezuela-like collapse.

Nigeria may have one of the worst governments in the world. Even in good times, the country was in poor shape. But now, with oil prices falling to all-time lows, Nigeria is about to go the way of Venezuela and Zimbabwe with total economic collapse.

Now, with oil prices at unprecedented lows, the country is about to collapse in a Venezuela-like catastrophe.

Socialism gone wrong. Nigeria spends a staggering amount of money subsidizing fuel. Data by Bloomberg.

The country’s cost of producing oil is $15-17 per barrel, but with crude prices falling near or below zero, this won’t be enough to avert a sovereign debt crisis.

Nigeria’s benchmark Bonnie Light crude hasn’t hit zero yet. But with millions of barrels sitting unsold, Nigeria may start paying customers to take delivery due to its lack of onshore storage facilities. 

According to some sources, Nigeria is losing an average of $35 million a day in accruable revenue. And its currency, the Naira, maybe on the verge of a Zimbabwe-like devaluation because oil is the only source of the foreign exchange needed to prop it up.

The country’s cost of producing oil is $15-17 per barrel, but with crude prices falling near or below zero, this won’t be enough to avert a sovereign debt crisis.

Nigeria’s benchmark Bonnie Light crude hasn’t hit zero yet. But with millions of barrels sitting unsold, Nigeria may start paying customers to take delivery due to its lack of onshore storage facilities. 

According to some sources, Nigeria is losing an average of $35 million a day in accruable revenue. And its currency, the Naira, maybe on the verge of a Zimbabwe-like devaluation because oil is the only source of the foreign exchange needed to prop it up.

Drunk on cheap debt from China, domestic lenders, and high-interest rate Eurobonds, Nigeria is on the cusp of a massive sovereign debt crisis.

The country’s total debt stands at an estimated $84 billion, with up to 80% of its bilateral debt owed to China. According to Forbes, debt servicing eats up a full 2/3rds of all government revenue. And China is reluctant to forgive these debts — especially as it attempts to revive its own struggling economy.

Nigeria owes a huge amount of money to China. But China isn’t willing to write off these loans. Data by Bloomberg

Paradoxically, Nigeria’s President Muhammadu Buhari has decided to pile on even more debt recently, approving an additional $23 billion loan request from international lenders.

It is also important to note that Nigerian senators will still enjoy their $37,500 monthly salaries under the new budget cuts.