Oil Price Plunges 20% to $67, Jeopardizing Nigeria’s 2025 Budget Targets – Springs NewsNG
BY Okafor Joseph
The price of Bonny Light, Nigeria’s premium crude, has dropped by 20% to $67 per barrel from $84.02 per barrel in January 2025. This decline raises concerns over the Federal Government’s ability to meet its 2025 budget revenue target.
The 2025 budget is based on a crude oil price benchmark of $75 per barrel, an oil production target of 2.06 million barrels per day (bpd), and a revenue projection of N36.35 trillion, with 56% expected from oil sales. The fall in oil prices could result in a 10.7% shortfall in projected oil revenue, while current output remains significantly below the budgeted benchmark at 1.7 million bpd.
According to data released yesterday by the U.S. Energy Information Administration, the market downturn is due to rising crude inventories, which reached 3.6 million barrels by the end of February 2025. Additionally, the Organisation of Petroleum Exporting Countries (OPEC+) plans to ease its production cuts starting in April 2025, further affecting prices.
Speaking with Vanguard, Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the implications of this development on Nigeria’s economy and budget.
“This situation has serious consequences for the budget, as our benchmark price is set at $75 per barrel. With oil prices now below $70 and possibly declining further, particularly if former U.S. President Donald Trump succeeds in brokering peace between Ukraine and Russia, government revenue will be negatively affected,” Yusuf stated.
He further emphasized the impact on foreign exchange and macroeconomic stability, warning that maintaining current expenditure levels could lead to a higher-than-expected fiscal deficit. “A growing deficit could destabilize the economy. Therefore, adjustments in spending must be considered to prevent an unsustainable financial gap.”
Despite the fiscal concerns, Yusuf noted one potential benefit: lower oil prices could reduce energy costs, which would be favorable for businesses. “From a business perspective, particularly regarding energy expenses, this could be a positive outcome.”
