Director General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf has said that the rising and falling price of crude oil has potential effects on the economy.
He however advised that now that Nigeria has been exempted from the OPEC output cut, the country should take full advantage of the opportunity to increase output, but noted that for Nigeria to do so, it must tackle the problem of Niger Delta which is a critical issue if we must maximise this opportunity.
He told SHIPS & PORTS DAILY: “Remember we were exempted from the OPEC quota thing, so we should take full advantage of that by increasing our output. We cannot increase output unless we deal with Niger Delta issue. So that is why we have to tackle this issue of Niger Delta. We need to come up with clear ways of dealing with the problem. I don’t think the military approach is going to solve the problem. It has to be a combination of strategies.
“There is revenue effect because oil is still a major source of revenue, so we cannot wish that away. If oil prices increase, it will impact the revenue positively.
“There is foreign exchange effect. It is still a major source of foreign exchange for the country. It has implication for our reserve. If oil prices are going up, it will impact the supply side of our foreign exchange positively, that can help moderate the current depreciation that we are experiencing. It will also help to build our reserve if the increase is sustained.
“There are lots of investors that have been down as result of the collapse of oil. Some of them have lost money. The economics of production are not so good because of oil price. But as oil price improves, the economies of the business will also improve. And that is good for investment in our upstream oil sector. So those are the three critical effects. What is most critical at this time is how we restore our output to a level that is above two million barrels per day.”