Wednesday, 09 April 2025 05:04

Nigeria's economic crisis deepens as oil price crash threatens FG’s 2025 budget

Rate this item
(0 votes)

Global oil prices plummeted to four-year lows Wednesday, with Brent crude crashing 3.4% to $60.69/barrel and WTI falling 4% to $57.22, as the U.S. imposed 104% tariffs on Chinese imports - a move that could cripple Nigeria's oil-dependent economy already reeling from production shortfalls and stalled reforms.

Trade War Triggers Market Collapse

The tariff escalation between the world's top two economies has sparked fears of a global recession, with Rystad Energy warning China's oil demand growth could drop by 100,000 barrels daily. The crisis compounds existing market pressures after OPEC+'s decision to increase output by 411,000 bpd in May.

Goldman Sachs now forecasts Brent could fall to $55 by 2026 - $20 below Nigeria's 2025 budget benchmark of $75/barrel. With current prices at $60, Africa's largest oil producer faces a catastrophic revenue shortfall.

Nigeria's Perfect Storm

The petroleum sector's collapse threatens to:

1. Derail the N55 trillion budget

- Already, Q1 2025 saw N5.4 trillion in unrealized oil revenue due to production deficits

2. Trigger massive borrowing

- The fiscal deficit could surpass N13 trillion as net oil revenues dwindle to $25/barrel after $40 production costs

3. Paralyze refineries

- Dangote Refinery may abandon U.S. crude imports due to tariffs, while domestic supply constraints worsen

4. Worsen debt crisis

- Crude-backed loan repayments face default risks with dwindling output

"At below $70 oil, we're in crisis territory," warned NES President Adeola Adenikinju. "The budget framework is becoming impractical."

Production Woes Compound Crisis

Despite briefly hitting 1.54 mbpd in January, Nigeria's output remains 25% below its 2.06 mbpd target. February saw production crash to 1.46 mbpd, resulting in:

- 15.5 million barrels lost in January ($1.13 billion revenue shortfall)

- 16.8 million barrels lost in February ($1.26 billion deficit)

- 15.5 million barrels lost in March ($1.03 billion gap)

Energy lawyer Ameh Madaki blasted Nigeria's "fraudulent budgeting process," noting: "We're borrowing to fund fiscal recklessness while citizens suffer."

No Easy Solutions**

With tax reforms stalled in the National Assembly and NNPC's new leadership needing months to address oil theft and production challenges, economists urge emergency measures:

- Immediate budget revisions to reflect $60-$65 oil reality

- Drastic cuts to wasteful expenditures

- Accelerated economic diversification

As Wood Mackenzie warns of prolonged $73 oil averages, Nigeria faces its worst fiscal crisis in a decade - caught between global trade wars and domestic production failures that could collapse its 2025 economic plans.

April 28, 2025

Manufacturers battle for survival amid rising energy, borrowing costs

Nigerian manufacturers are struggling under the weight of escalating energy costs, which now consume approximately…
April 28, 2025

Natasha mocks Akpabio in scathing ‘apology’ over sexual harassment claim

Suspended Kogi Central Senator Natasha Akpoti-Uduaghan on Sunday delivered a blistering, sarcastic "apology" to Senate…
April 28, 2025

How to boost your happiness in just a few minutes

Prioritizing your joy can feel like an abstract assignment that, frankly, many of us don’t…
April 26, 2025

Declassified CIA file about UFO aliens attacking soldiers released

A declassified document posted to the CIA’s website is raising eyebrows with claims of an…
April 28, 2025

Boko Haram kills 14 farmers and vigilantes in Borno

Suspected Boko Haram terrorists have killed at least 14 people, including farmers and vigilantes, in…
April 28, 2025

Here’s the latest as Israel-Hamas war enters Day 570

Israel says it strikes Hezbollah missiles in southern Beirut The Israeli army said on Sunday…
April 27, 2025

Smartphone use could reduce dementia risk in older adults, study finds

The first generation that has been exposed consistently to digital technology has reached the age…
January 08, 2025

NFF appoints new Super Eagles head coach

The Nigeria Football Federation (NFF) has appointed Éric Sékou Chelle as the new Head Coach…

NEWSSCROLL TEAM: 'Sina Kawonise: Publisher/Editor-in-Chief; Afolabi Ajibola: IT Manager;
Contact Us: [email protected] Tel/WhatsApp: +234 811 395 4049

Copyright © 2015 - 2025 NewsScroll. All rights reserved.