Crude oil price has dropped to $59 for the first time since February 2021.
Brent crude, global oil price, fell by 5.09 percent to
$59.62 per barrel at 12.30 WAT while US West Texas Intermediate fell by 5.54
percent to $56.28 per barrel on Wednesday.
The recent decline in oil prices follows an announcement by
President Donald Trump on April 2, imposing sweeping global tariffs (including
14 percent on Nigeria) on all imports into the US.
Moreso, on April 4, the Organisation of Petroleum Exporting
Countries (OPEC) and its allies decided to increase oil production by 411,000
barrels per day (bpd) in May.
The current oil price threatens Nigeria’s oil revenue, as it
is lower than Nigeria’s 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.
“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 tothe private sector and enable growth in our
economy to buffer low crude oil prices.”
Since the country depends largely on oil revenue, Pratt said
“there can be no better time to really diversify”.
On Monday, Wale Edun, the minister of finance, said the oil
price plunge will have an adverse 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 (bpd) 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.
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