- Crude oil price further crashed to $59 per barrel
- Oil price drop threatens Nigeria’s revenue, much of which comes from crude sales
- The government plans to curtail the price effect by ramping up crude production, reviewing the budget, and devising non-oil revenue strategies
The price of crude oil has further crashed to $59 for the first time since February 2021.
As of 12:30 WAT on Wednesday, April 9, the price of Brent crude dropped by 5.09 per cent to $59.62 per barrel, while US West Texas Intermediate (WTI) fell by 5.54 per cent to $56.28 per barrel.
The fall in prices followed the imposition of tariffs on over 50 countries by United States President, Donald Trump, on April 2, on all US imports, with Nigeria being slammed with a 14 per cent tariff.
The US tariffs imposition led to China’s retaliatory tariffs on US goods, as the world’s top oil importer said it would impose additional tariffs of 34 per cent on all US goods from April 10, even as nations around the world have readied tariff retaliation.
The decline in oil prices was further compounded by the sudden crude output increase by the Organisation of Petroleum Exporting Countries and Allies (OPEC+).
OPEC+ announced on Thursday, April 3, that it would increase production to 411,000 barrels per day (bpd) in May, up from the previously planned 135,000 bpd.
It said the move follows eight member countries’ decision, after a virtual meeting, to phase out oil output cuts.
Following the production boost, the oil prices began declining at the weekend with Brent crude falling by 6.8 per cent to $69.85 a barrel while US WTI crude declined by 7.08 per cent to $66.63, at 10 pm WAT on Friday, April 4.
Oil prices declined to $65 per barrel as of Saturday, April 5. The price of Brent crude further crashed to $64.16 while the US West Texas Intermediate (WTI) crude fell to $60.73 as of Monday, April 7.
Oil price drop threatens Nigeria’s revenue
Since most of Nigeria’s revenue comes from crude oil sales, the continued fall of crude oil prices threatens the country’s revenue as the Federal Government would have to contend with the possible deficits and device measures to ensure the scalability of the 2025 budget.
The N54.99 trillion 2025 budget was based on a $75 per barrel oil price benchmark and a crude oil production target of 2.06 million barrels per day (bpd).
Following the slump of oil prices below the $75 per barrel benchmark, the projected revenue in the budget becomes a tall dream, given Nigeria’s huge reliance on oil revenue for its fiscal sustainability.
This is further compounded by the failure of the Federal Government to ramp up daily crude oil production to its projected 2.06 million barrels per day.
As of February 205, Nigeria’s daily average crude oil production stood at 1,465,006 barrels per day (bpd), about five per cent decline compared to the 1,538,697 bpd recorded in January when it exceeded OPEC’s production quota of 1.5 million bpd as its oil production, including crude and condensate, increased to 1.74 million bpd from 1.6 million bpd in December 2024.
Government plans to curtail price effect, ramp up production, review budget
To mitigate the adverse effect of the global oil price slump, the Federal Government said it plans to ramp up crude production and review the 2025 budget.
On Monday, April 7, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the government will also shift its focus to non-oil revenue mobilisation and innovative non-debt financing alternatives.
“We are intensifying efforts to ramp up crude oil production.
“We are also focusing on non-oil revenue mobilisation by FIRS and Customs, budget adjustment and prioritisation where possible, and also innovative non-debt financing strategies,” he said.
Crude oil prices fall to $65 per barrel, first time since 2021
Meanwhile, TheRadar earlier reported that crude oil prices fell to $65 per barrel, the first time since 2021, following the United States' import tariffs and a sudden Organisation of Petroleum Exporting Countries and Allies (OPEC+) output increase.
The dual impact of the policies, as well as China’s retaliatory tariff action, erased $10 per barrel from global benchmarks.
