Nigeria’s oil revenue is reportedly being threatened as oil prices currently declined below $60 per barrel, a decline similar to the devastating downturn experienced during the peak of the COVID-19 pandemic.
Brent crude, global oil price, fell by 5.09% to $59.62 per barrel at 12.30 PM WAT while US West Texas Intermediate fell by 5.54% 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, reportedly climbed on Thursday, 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 had a strong impact, especially on natural gas, as many of the high retaliatory tariffs were placed on South-East Asian nations.
Noting that Nigeria gets about 90 percent of its foreign exchange earnings from oil exports, the drop in crude oil prices 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 had 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.
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.
