Nigeria’s revenue projections for the 2025 budget face a major setback as the price of Bonny Light crude oil plunges by 10.6% to $73.53 per barrel, down from $84.02 on January 15.
With the federal government’s budget benchmark set at $75 per barrel and an expected oil production of 2.06 million barrels per day (bpd), the shortfall raises concerns about achieving the N36.35 trillion revenue target, 56% of which is tied to oil earnings.
Compounding the issue, crude oil output remains below the budgeted 2.06 million bpd, standing at 1.737 million bpd in January 2025, despite a slight increase from December’s 1.667 million bpd, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Economic analysts warn that declining oil prices could severely impact government revenue. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that while the drop could hurt oil earnings, businesses might benefit from lower fuel costs, leading to reduced expenses on petrol, diesel, and jet fuel.
Similarly, Mazi Colman Obasi, President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), pointed out that although budget execution could suffer, refiners might see lower production costs, which could eventually reduce petroleum product prices.
As global oil market trends continue to fluctuate, Nigeria faces a tough balancing act between fiscal stability and economic sustainability.
