Oil Price Falls To $67 Per Barrel | Nigeria’s 2025 Budget At Risk

Oil Price Decline Raises Concerns Over Budget 2025 Revenue Target

The price of Bonny Light, Nigeria’s premium crude, has experienced a significant decline, dropping by 20% to $67 per barrel from $84.02 per barrel in January 2025. This sharp fall raises concerns about the Federal Government’s ability to meet its 2025 budget revenue target, which is heavily reliant on oil earnings.

Budget 2025 at Risk Due to Oil Price Drop

The 2025 budget was structured around a crude oil benchmark of $75 per barrel and an estimated oil production level of 2.06 million barrels per day (bpd). With revenue projections set at N36.35 trillion—56% of which is expected to come from oil sales—the recent slump in oil prices could lead to a revenue shortfall of approximately 10.7%.

Currently, Nigeria’s oil production stands at 1.7 million bpd, falling significantly short of the budgeted target. The reduced output, combined with the falling global oil prices, presents a major financial challenge for the government’s fiscal plans.

Global Oil Market Influences

According to the latest data from the U.S. Energy Information Administration (EIA), the decline in crude oil prices is linked to increased U.S. inventories, which reached 3.6 million barrels by the end of February 2025. Additionally, the decision by the Organization of Petroleum Exporting Countries (OPEC+) to gradually lift production cuts starting in April 2025 has contributed to the oversupply in the global oil market.

Economic Implications and Expert Analysis

Speaking to Vanguard, Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), emphasized the serious consequences of the oil price drop on Nigeria’s budget and overall economic stability.

“This situation presents a significant challenge for the 2025 budget, as our oil benchmark is set at $75 per barrel, while prices are currently below $70. If this trend continues or worsens—especially if the U.S. succeeds in brokering a peace deal between Ukraine and Russia—the revenue gap will widen further,” Yusuf explained.

He added that the declining oil price also affects foreign exchange earnings, creating additional pressure on macroeconomic stability. If the government maintains its current expenditure level despite reduced revenue, Nigeria could face a higher-than-expected fiscal deficit.

However, Yusuf pointed out a silver lining, noting that lower oil prices could drive down energy costs, which would benefit businesses and consumers alike.

Potential Adjustments and Future Outlook

To mitigate the adverse effects of falling oil prices, economic analysts suggest that the government should reassess its spending priorities. Adjusting budget allocations based on projected revenue trends could help prevent excessive borrowing and economic instability.

For further insights into oil market trends, visit the U.S. Energy Information Administration (EIA) website: https://www.eia.gov.