Oil per barrel price drops 20% to give $67
Oil vessels
Oil per barrel price drops 20% to give $67.
• Implications of negativity for the budget.
The price of Bonny Light, Nigeria’s premium crude dropped further by 20 per cent to $67 per barrel from $84.02 per barrel on January 2025, fuelling fears over achievement of Federal Government’s budget 2025 revenue target.
The Budget 2025 is based on crude oil price benchmark of $75 per barrel, oil production of 2.06 million barrels per day, bpd and revenue target of N36.35 trillion with 56 per cent coming from oil sales.
The fall in crude oil price represents a 10.7 per cent potential decline in FG’s oil revenue target, even as output, currently at 1.7 million bpd, remains significantly below the 2025 budget benchmark of 2.06 million bpd.
In its data released yesterday, the U.S. Energy Information Administration attributed the market situation to rising inventories, which stood at 3.6 million barrels at end of February 2025 (last weekend).
It was also attributed to the decision of Organisation of Petroleum Exporting Countries, popularly known as OPEC+ to unwind its production cuts starting in April 2025.
The Chief Executive Officer, Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, said the development has far-reaching implications for the nation’s 2025 budget in particular and economy in general.
He said: “This development has negative implications for the budget because our budget benchmark is $75 per barrel. Now, we are having oil price below $70 per barrel and the prognosis is that it may remain at this level or possibly even lower, especially if President Donald Trump is able to achieve a breakthrough with the peace deal between Ukraine and Russia.
“It has implications for the budget from a revenue point of view. It also has implications from a foreign exchange point of view. These are the two major implications that it has as far as our economic management is concerned.
“If we still stick to our expenditure profile, then it means that we’ll be looking at a much higher fiscal deficit than we have planned but that will not be advisable because deficits has a way of affecting macroeconomic stability.
“This often have very strong systemic impact on us pay a heavy price for unstable macroeconomic environment. I think as we progress, we need to adjust our spending again, depending on what the revenue outlook. It is very important that we take all of this into account so that we don’t resort to an unnecessarily bloated deficit at the end of the day.
“However, the good news about this is that it’s going to bring down energy prices and that is good for business. From a business point of view, particularly from the energy cost perspective, this is something that is a positive.”
