Crude oil prices have fallen to $59 for the first time since February 2021.
Brent crude, the global benchmark, declined by 5.09 percent to $59.62 per barrel at 12:30 WAT, while US West Texas Intermediate dropped by 5.54 percent to $56.28 per barrel on Wednesday.
This downward trend follows the April 2 announcement by President Donald Trump regarding the imposition of widespread global tariffs, including a 14 percent levy on Nigerian imports to the US.
Additionally, on April 4, the Organisation of Petroleum Exporting Countries (OPEC) and its partners agreed to boost oil output by 411,000 barrels per day (bpd) in May.
With oil prices now below Nigeria’s 2025 budget benchmark of $75 per barrel, the country’s budget execution faces serious risks.
Commenting on the situation, Jide Pratt, chief operating officer of Aiona and country manager at Tradegrid, noted that the slump in oil prices translates to reduced national revenue and shrinking foreign reserves, particularly following the suspension of the naira-for-crude deal.
“We’ve seen an increase in foreign exchange (FX) rates, which does not help monetary or fiscal policy,” he said.
“Personally, I believe it does show that the benchmark for our budget leaves a lot to be desired. More importantly, we are on the road to a supplementary budget and loans.
“We need to sell off some assets to the private sector and enable growth in our economy to buffer low crude oil prices.”
As Nigeria relies heavily on oil income, Pratt emphasized that there can be no better time to really diversify.
On Monday, Wale Edun, the minister of finance, acknowledged that the oil price decline would negatively impact Nigeria. To mitigate the effects, he said, “we are intensifying efforts to ramp up crude oil production.”
“We are also focusing on non-oil revenue mobilisation by FIRS and Customs,” he added.
“Budget adjustment and prioritisation where possible, and also innovative non-debt financing strategies.”
The country’s crude oil production dropped to 1.46 million barrels per day (bpd) in February, falling short of OPEC’s 1.5 million quota.
This output is also below the 2.1 million barrels of oil per day target set for 2025 by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
