The price of crude oil has dropped to $59 for the first time since February 2021.
US West Texas Intermediate fell by 5.54 percent to $56.28 per barrel on Wednesday while Brent crude, global oil price, fell by 5.09 percent to $59.62 per barrel at 12.30 WAT.
The recent reduction in oil prices comes after an announcement by President Donald Trump on April 2, enforcing sweeping global tariffs (including 14 percent on Nigeria) on all imports into the US.
Furthermore, on the 4th of April, the Organisation of Petroleum Exporting Countries (OPEC) and its allies made a decision to increase oil production by 411,000 barrels per day in May.
The current oil price threatens Nigeria’s budget execution, as it is lower than the 2025 budget benchmark of $75 per barrel.
Speaking on the development, Jide Pratt, chief operating officer (COO) of Aiona, and country manager, Tradegrid, said the recent drop in oil prices means lower revenues and lower foreign reserves for Nigeria, especially with 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.
On Monday, the minister of finance,Wale Edun said the oil price plunge will have a detrimental effect on Nigeria, and to curtail any price effect, “we are intensifying efforts to ramp up crude oil production”.
We are also focusing on non-oil revenue mobilisation by FIRS and Customs” he said.
“Budget adjustment and prioritisation where possible, and also innovative non-debt financing strategies.”
Nigeria’s oil production fell to 1.46 million barrels per day in February, below the 1.5 million quota set for the country by the Organisation of Petroleum Exporting Countries (OPEC).
The output level is below the 2.1 million barrels of oil per day target set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for 2025.