Mixed Fortunes For Nigeria As Oil Prices Fall To $73.5 Per Barrel, Nigeria’s 2025 Budget Threatened
- Crude oil prices have continued to decline, a negative sign for the Nigerian economy, and possibly, the naira
- Nigeria’s Bonny Light Crude fell 10.6% to $73.53 per barrel from $84.02 in January, causing panic about the nation’s budget
- Experts have revealed that a fall in crude oil prices could lead to the naira’s depreciation as FX reserves decline
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Nigeria’s Bonny Light crude dropped by 10.6% to $73.53 per barrel from $84.02 in January, sending fears over the performance of the Nigerian government’s 2025 budget and revenue target.
The 2025 budget benchmarked oil prices at $75 per barrel, oil production at 2.06 million barrels per day, and a revenue projection of N36.35 trillion, of which 56% was projected to come from oil sales.
Read also:Police Arrest 2 Pakistanis Over Alleged Kidnap Of Fellow Countryman In Lagos
Crude oil price decline threatens Nigeria’s economy
Experts say the decline in oil prices represents a 6.6% potential dip in Nigeria’s oil revenue target, worsened by declining oil output below 2.06mbpd.
Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed that Nigeria’s oil output stood at 1.737 million barrels per day in January this year, from 1.667 million recorded in December 2024.
Muda Yusuf, the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE) disclosed that the fall in energy prices has grave implications for Nigeria’s revenue.
He revealed that the fall may impact negatively on Nigeria’s budget and revenue.
Low crude oil prices lead to a drop in fuel prices
He, however, said that the decline also presents a good opportunity for businesses as a decline in crude oil price could reduce the cost of petroleum products such as petrol, diesel and aviation fuel.
Vanguard reports that the national president of the Oil and Gas Service Providers Association of Nigeria (OGSPAN) Coleman Obasi said apart from affecting Nigeria’s budget negatively, low crude oil prices lead to low prices of petroleum products.
Read also:Lady Who Relocated To Canada Shares 7 Things That Make Her Unhappy Despite Living Abroad
He said the decline could also lead to a decrease in refiners’ costs.
Low crude oil prices threaten naira’s stability
Other experts also revealed that the drop might affect the Nigerian currency negatively.
According to them, the country’s foreign exchange reserve will suffer as most crude oil sales are deposited in the reserves used to defend the naira from depreciation and volatility.
Legit.ng reported that Nigeria’s FX reserves depreciated by about $1.38 billion in 2025 amid CBN’s battle to combat naira decline and other international payments.
Data from the Central Bank of Nigeria (CBN) shows that as of September 2024, the Nigerian government have spent over $5.8 billion on debt-servicing and other international payments.
Crude oil sales are a major source of foreign exchange for the country.
The decline in oil prices will likely affect sales, the FX reserves and the value of the naira, analysts say.
Crude oil soars in international market
Legit.ng earlier reported that Nigerians may experience a rise in petroleum product prices in the coming days due to the increase in the cost of Brent, the global benchmark for crude.
Crude oil price is a key commodity that sets the price of refined petroleum products.
According to reports, on Sunday, January 12, 2025, Brent crude price reached $79.76 per barrel.
