2025 Budget Faces Revenue Crisis as Oil Output Falls Short of Targets in First Half
Report by Okafor Joseph and Rita Uzuh for SpringnewsNG Media Limited.
ABUJA, Nigeria — The Federal Government’s 2025 budget is facing mounting pressure due to a significant shortfall in oil production and crude oil prices during the first half of the year (H1’25), raising concerns over Nigeria’s ability to meet key fiscal obligations.
The budget, heavily reliant on oil revenue, was based on a benchmark of 2.06 million barrels per day (bpd) at $75 per barrel and an exchange rate of ₦1,500 to $1. However, recent data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) shows that production has consistently underperformed, and oil prices have remained below projections.
According to the NUPRC’s July 2025 “Crude Oil and Condensate Production” report, Nigeria recorded daily outputs of:
- 1.737 million bpd in January
- 1.671 million bpd in February
- 1.603 million bpd in March
- 1.683 million bpd in April
- 1.657 million bpd in May
- 1.697 million bpd in June
In June, the lowest and peak combined crude oil and condensate production stood at 1.61 million bpd and 1.82 million bpd, respectively—well below the 2.06 million bpd target.
Meanwhile, crude oil prices have also trailed behind budget forecasts. OPEC’s Monthly Oil Market Reports show that Nigeria’s Bonny Light crude averaged just $71.73 per barrel in June 2025, with the highest price of $80.14 recorded in January and the lowest at $64.55 in May.
The Organisation of Petroleum Exporting Countries (OPEC) attributed the volatility to geopolitical tensions in the Middle East and Eastern Europe, and uncertainties around U.S. trade policies. Heightened speculative activity in oil futures markets further worsened price instability during the period.
Analysts Warn of Funding Gap in H2’25
Economic experts are warning that the situation could worsen in the second half of the year if urgent corrective measures are not taken.
Professor Wumi Iledare, Executive Director of the Emmanuel Egbogah Foundation, described the original budget assumptions as “overly optimistic” and warned that oil price and production volatility will continue to impact budget implementation.
“This clearly shows that the budget process needs improvement. Oil prices may rise, but they won’t be stable. This will impact Nigeria’s ability to meet its spending commitments in H2’25,” Iledare noted.
Vahyala Kwaga, Group Head of Research at BudgIT, also emphasized the persistent structural challenges plaguing the oil sector—low production capacity, pipeline vandalism, oil theft, underinvestment, and delayed maintenance of infrastructure.
He criticized the government for basing its revenue estimates on inflated oil price assumptions, advising that “a more pessimistic and conservative approach would allow for better revenue planning.”
According to Kwaga, the widening gap between revenue and expenditure could force the government to:
- Cut public spending
- Increase borrowing, or
- Boost non-oil revenue generation
He noted that while borrowing may offer short-term relief, it would deepen fiscal deficits and reduce future public spending capacity. “The most sustainable option is to increase non-oil revenues fairly, efficiently, and transparently,” he advised.
LCCI Calls for Urgent Reforms
The Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, attributed the poor performance in H1’25 to deep-rooted policy and operational inefficiencies. She noted that despite relatively favorable price ranges between $70–$67 per barrel, Nigeria still struggled due to:
- Pipeline vandalism
- Crude oil theft
- Regulatory delays
- Declining foreign investments in upstream assets
She stressed that without urgent reforms, including improved security in oil-producing regions and incentives for investors, the 2.06 million bpd target remains out of reach in the second half of 2025.
Almona warned that further revenue shortfalls, coupled with volatile exchange rates, could derail budget implementation. “The second half of 2025 presents a narrow opportunity for fiscal realignment. It’s time for bold, realistic reforms driven by political will and collaboration with the private sector,” she concluded.
