The global slump in crude oil prices, triggered by US tariffs, poses a significant threat to Nigeria’s 2025 budget despite potential petrol price cuts.

Nigeria’s ambitious 2025 budget faces mounting pressure following a significant global crash in crude oil prices.

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This downturn coincides with fuel marketers anticipating a potential decrease in the prices of petroleum products across the nation.

Experts who spoke with our correspondent highlighted that the crude oil price slump, largely attributed to tariffs imposed by United States President Donald Trump on various countries, presents a dual impact scenario for the Nigerian economy.

While the Federal Government braces for potential revenue shortfalls from crude oil sales, Nigerian consumers may experience some relief at the pumps with cheaper fuel.

Our reports indicate that the decline in crude oil prices commenced over the weekend, with prices plummeting to $65 per barrel by Saturday.

This downward trend intensified on Monday, as Brent crude stood at $64.16 per barrel and the US West Texas Intermediate (WTI) fell to $60.73.

According to data from oilprice.com, the combined effect of Trump’s import tariffs, the Organisation of the Petroleum Exporting Countries and Allies (OPEC+)’s decision to accelerate the unwinding of production cuts, and China’s retaliatory measures have collectively wiped off $10 per barrel from global oil prices.

This has resulted in ICE Brent falling below the $65 per barrel mark for the first time since August 2021.

China’s imposition of retaliatory tariffs on US goods is seen as an escalation of a trade war, leading investors to factor in a higher likelihood of a global economic recession.

As the world’s leading oil importer, China’s actions carry significant weight in the global energy market. China announced it would impose additional tariffs of 34 per cent on all US goods starting from April 10th.

Reuters reported that numerous nations worldwide are preparing retaliatory measures following President Trump’s decision to raise tariffs to their highest levels in over a century.

Adding further downward pressure on oil prices is OPEC+’s decision to advance its plans for increasing oil output. The group now aims to return 411,000 barrels per day to the market in May, a significant increase from the previously planned 135,000 barrels per day.

As crude oil prices continue their downward trajectory, the Nigerian Federal Government faces a considerable challenge in addressing potential revenue deficits within the 2025 budget.

It is important to recall that the Federal Government based its budget projections on a crude oil price of $75 per barrel, with crude oil being the nation’s primary source of revenue.

With crude oil prices now hovering approximately $10 below the projected benchmark, the anticipated revenue figures appear increasingly unrealistic, particularly given the Federal Government’s ongoing struggle to increase daily crude oil production to its targeted two million barrels per day.

The budget is predicated on a benchmark oil price of $75 per barrel and an ambitious production target of 2.06 million barrels per day.

Approximately N19.60 trillion, representing up to 56 per cent of the initially projected N34.8 trillion revenue, is expected to be generated from oil, underscoring Nigeria’s significant reliance on oil for its fiscal sustainability.

In an interview with The PUNCH, the Executive Secretary of the Major Energies Marketers Association of Nigeria (MEMAN), Clement Isong, described the crude price crash as detrimental to the nation’s economy, considering the budget’s underlying projections.

Isong stated that the current global situation is clearly one of turmoil, unprecedented in its severity.

He recalled previous market crashes in 2008 and potentially 2014, but emphasised that the current situation feels distinctly worse on a global scale.

“Fortunately, this is man-made. It is because one person stood up and did something.

So, it also means that if he can compromise, or they can work out some compromises, it might be reversed. But is there a negative impact on my country? Yes, as usual, it’s a negative and positive impact,” Isong explained.

He stressed that the current low crude oil price is significantly adverse for the budget based on the established benchmark.

“The extremely low price of crude oil at $65 per barrel is really bad based on the benchmark that was used for the budget for this year.

So, if it should last, it means that the deficit would be even worse than what was anticipated. It’s really bad news for the expected revenues for the country,” Isong warned.

The MEMAN boss also suggested that the low crude oil price could negatively impact investments in the oil sector, particularly given the existing high cost of production in Nigeria.

“Hopefully, it will not impact too much on investments, because, as you recall, we have had insufficient investments in our upstream, leading to the decline in our crude oil output.

Normally, in the world, when crude oil prices are high, those who invest in production bring out more money. Remember that Nigeria’s production cost is quite high because a lot of new production is deep offshore.

So, because deep offshore is so expensive, you really need the cost of the crude to be as high as possible in order to generate the revenue that the country needs to fund its ambitious development programme.

So, it’s both negative and positive.” Isong noted that while the $40 production cost per barrel has seen some reduction, “$66 per barrel is not very interesting. It’s not very good for us.”

However, the energy expert also maintained that the price crash would inevitably impact pump prices, leading to a reduction in the cost of fuel for consumers

. “With respect to prices at the pump, over time, I guess, they will go down. If the crash is continuous, fuel prices will go down, and that will provide some relief to commuters and transporters of goods. So, it has a dual impact,” he submitted.

Similarly, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, concurred that the crude oil price crash would have both positive and negative consequences for the Nigerian economy.

He emphasised Nigeria’s over-reliance on oil revenue to fund its budget, warning that a significant price crash could spell serious trouble for the nation’s finances.

For retailers, Gillis-Harry predicted price fluctuations and instability in the fuel market, noting that the price of petrol is currently nearing N1,000 per litre in some areas.

He urged the government to focus on developing the internal economy and reducing dependence on oil revenue, suggesting that Trump’s increase in tariffs from five per cent to 14 per cent should serve as a catalyst for seeking alternative revenue sources.

Gillis-Harry indicated that retail outlets should anticipate a reduction in pump prices due to the falling cost of crude oil feedstock.

“Fuel reduction should normally be expected because the cost of the feedstock is part of the cost of production. If the crude price reduces, it will affect the price. But we don’t know when the price cut can happen.”

Speaking from an academic perspective, Professor Emeritus Wumi Iledare, an energy expert, stated that volatility is inherent in the petroleum business.

He agreed that the current price crash would negatively impact government revenue while simultaneously leading to lower fuel prices for consumers.

“In the short run, it is bad for every petroleum-dependent economy in terms of government access to revenue and pressure on foreign reserves.

The crash, however, could lead to higher economic activities, reduce petroleum product prices, and lead to higher economic output because of high employment in the private sector.”

Professor Dayo Ayoade, an energy expert at the University of Lagos, attributed the crude oil price tumble to fears of a recession triggered by President Trump’s actions unsettling the global market.

He predicted that prices would likely remain low until confidence is restored in the global economy. Ayoade expressed concern that Nigeria would likely need to resort to borrowing to fund its budget, highlighting the nation’s existing challenges with significant debt and debt servicing.

“Crude price crash is bad for Nigeria because our budget is fixed on certain prices, and if we don’t meet those prices, we won’t be able to fund the budget. We will have to go and borrow.

Nigeria has over-borrowed; we are struggling with a lot of economic challenges based on huge debts and funding those debts.

We should learn to rely on ourselves and focus on internal growth. We should use our big population to create prosperity.

We should go back to the farm. People should not be hungry with the kind of land and weather God has blessed us with. We should look inwards,” he urged.

On Sunday, crude oil refiners suggested that petrol prices could potentially fall to as low as N400 per litre if crude oil prices dropped to $50 per barrel.

However, they cautioned that the recent cessation of the naira-for-crude deal would likely prevent such a significant price reduction.

Similarly, the Federal Government has expressed concerns that President Trump’s tariffs could have a negative impact on the Nigerian economy.

The Minister of Industry, Trade and Investment, Jumoke Oduwole, warned that the move could significantly affect both oil and non-oil trade flows to the United States, a key market for Nigeria.