The price of Bonny Light, Nigeria’s premium oil grade, on Wednesday, dropped by 5.09 per cent to $59.62 per barrel in the international market at the backdrop of the ongoing ripples created by the tariff war that has followed the series of tariff hikes announced by the United States of America early this week.
The oil price was also hit by the decision of the Organisation of Petroleum Exporting Countries (OPEC) and its allies to increase oil production by 411,000 barrels per day (bpd) in May, 2025.
According to the report by Vanguard newspaper on Thursday, the development will negatively impact the Nigeria’s N54.99 trillion 2025 budget, which is based on oil price of $75 per barrel and 2.06 million barrels per day (bpd).
This indicates a massive setback in terms of price and output as the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, puts the output, including Condensate at 1,671,953 bpd in February 2025.
The Chief Executive Officer, Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, told the Vanguard newspaper that “This is a serious problem as we have just completed the first quarter of the year. We have three more quarters to go, meaning that we have serious issues in our hands, if the situation persists.
“It poses a very serious challenge to our economic management team. First, it poses a risk to our revenue.
Second, it poses a risk to our exchange rate. Our economy is dependent to foreign exchange earnings. The low oil price would put pressure on foreign exchange earnings. We all know the implications on a weak exchange rate on the economy.”
However, findings by the newspaper indicated that the low crude oil prices may culminate in low prices of petroleum products in the domestic market.
The findings showed that major players in Nigeria’s downstream sector would announce a reduction in the prices of petrol.
In an interview with Energy Vanguard, the Chairman of the Lagos State Chapter of Petroleum Products Retail Outlet Owners Association of Nigeria, PETROAN, Ehimen Joseph, said: “This should be expected in a deregulated market. If the fall in crude oil prices persists for a while, it would impact developments in the value chain.”
Similarly, another operator, who pleaded anonymity, said: “Everything is pointing towards pump price reduction this week. One of the nation’s refineries has stopped printing its petrol tickets.
“There are claims there would be a petrol price review before Tuesday. All those who paid for the program are likely to get a discount on the new price, and then tickets will be issued.
“This is a reflection of the general fall in the prices of crude oil in the international market. Crude oil prices started falling after the Organisation of Oil Producing Countries and its allies, also known as OPEC+ decided to increase oil output by 410,000 barrels per day starting in May 2025.”
GIK/APA