Nigeria’s oil revenue is being threatened by the decline of oil prices below $60 per barrel, reaching levels reminiscent of the devastating downturn experienced during the peak of the COVID-19 pandemic.
Brent crude, global oil price, fell by 5.09 percent to $59.62 per barrel at 12.30 PM 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 China’s decision to raise tariffs on the United States goods to 84 percent, up from 34 percent, effective April 10 – a retaliatory move after President Donald levied 104 percent duties on Chinese imports.
Prices, however, buoyed on Thursday, climbing to $65.13 as at 7:53 AM WAT.
The rise is linked to President Donald Trump’s decision to pause retaliatory tariffs and to lower the tariffs to 10%.
The tariff pause has a strong impact, especially on natural gas, as many of the high retaliatory tariffs were placed on South-East Asian nations.
Nigeria gets about 90 percent of its foreign exchange earnings from oil exports, which amounts to a significant lost income.
The government’s $37 billion budget for 2025 — with its $8 billion deficit — was benchmarked against an international oil price of $75 a barrel.
Past Nigerian governments have pushed to diversify the country’s economy to reduce decades-old dependence on oil, but without much success. The current moment now raises the urgency for Nigeria to strengthen quality control and traceability standards to gain acceptance into more global markets.
Minister of Finance Wale Edun said on Tuesday that the Federal Government will boost non-revenue as a means of cushioning the adverse effects to trade tariffs imposed on countries by President Trump.
Edun also assured that the Economic Management Team (EMT) will meet to assess the likely impact of the 14 per cent tariff on goods exported from Nigeria to the United States.
He said the EMT would afterwards make recommendations to cushion its impact on the nation’s economy.
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).
Edun, who was speaking at an event organised by the Ministry of Finance Incorporated, said that while the adverse effect on Nigeria will be through an oil price plunge, the government is intensifying efforts to ramp up oil production and boost non-oil revenues.
The Trump administration recently imposed various tariffs ranging between 10 per cent and 65 per cent on different countries across the world, including Nigeria, which got a 14 per cent tariff on its exports to the United States.
“Therefore, it’s the price effect, the oil price effect that may affect Nigeria. And it is the job and responsibility of the economic management team of President Bola Ahmed Tinubu, amongst others, to look at the various scenarios that might play out.
“There’s global uncertainty at a huge level, so nobody knows exactly what will happen- the announcement that has been made. We’re not sure what will be delayed, what will be reversed, or what will be implemented.
“So, it is not an announcement that the budget is being reviewed. It’s an announcement that it is our responsibility to look at the various scenarios and options and advise government accordingly.”
“Nigeria-US Trade has been in surplus in the last 3 years (2022-2024). Nigeria’s exports to the US were N1.8 trillion, N2.6 trillion and N5.5 trillion in 2022-2024, respectively.
“Fortunately, oil and mineral exports accounted for 92 per cent. Implying oil and minerals exports amounted to N5.08 trillion in value while non-oil was just N0.44 trillion
“Consequently, the tariff effect on exports is negligible if we sustain our oil and minerals export volume.
“The adverse effect on Nigeria will be through oil price plunge. We are intensifying efforts to ramp up crude oil production to curtail any price effect
“We are also focusing on non-oil revenue mobilisation by FIRS and Customs, budget adjustment and prioritisation where possible, and also and innovative non-debt financing strategies,” the minister said.
An economist, Paul Alaje, cautioned that US President Donald Trump’s proposed tariff policy could significantly disrupt Nigeria’s economy- not in abstract terms but through specific economic disruptions.
These include rising import inflation, worsening exchange rate volatility, and reduced trade flows beyond crude oil.
Alaje explained that although Nigeria may appear shielded because of its crude oil exports, the broader economy remains highly exposed.
He said, “I’ve heard some government officials say the Nigerian economy is protected against the policy that President Trump is making. Well, I would say to the extent of selling off crude, the person that spoke may be correct, but when you look at the economy at large, we have started feeling the impact from exchange rates. It will affect us. Beyond that, it will also affect us when it comes to the commodity we are selling abroad, other than crude and agriculture.”
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 uncertainty of the naira-for-crude deal.
