Nigeria’s economy is facing a severe setback as Brent crude oil prices plummeted to $59.62 per barrel on Wednesday, a 5.09% drop, echoing the economic strain of the COVID-19 crisis. This decline, coupled with a 14% US tariff on Nigerian exports, threatens the nation’s oil revenue, which accounts for 90% of its foreign exchange earnings.
With prices briefly rebounding to $65.13 on Thursday, the volatility underscores global market instability driven by a US-China tariff war. As the government intensifies efforts to diversify and boost non-oil revenue, experts warn of broader economic disruptions beyond the oil sector.
On Wednesday, Brent crude fell to $59.62 per barrel by 12:30 PM WAT, while US West Texas Intermediate dropped 5.54% to $56.28 per barrel. This plunge comes against Nigeria’s 2025 budget, a $37 billion plan with an $8 billion deficit, benchmarked at $75 per barrel.
The shortfall could widen the deficit significantly. By Thursday, prices rose to $65.13 per barrel by 7:53 AM WAT, offering temporary relief but highlighting ongoing volatility. Nigeria’s oil production, at 1.46 million barrels per day (bpd) in February, also lags behind its OPEC quota of 1.5 million bpd, further straining revenue.
The oil price drop follows escalating trade tensions between the US and China. China raised tariffs on US goods to 84% from 34%, effective April 10, retaliating against President Donald Trump’s 104% duties on Chinese imports.
Trump’s subsequent pause on retaliatory tariffs, lowering them to 10%, spurred Thursday’s price recovery, particularly benefiting natural gas markets in Southeast Asia. However, this tariff war continues to disrupt global oil markets, directly impacting oil-dependent economies like Nigeria.
The Trump administration recently imposed tariffs ranging from 10% to 65% on various countries, including a 14% tariff on Nigerian exports to the US. Nigeria’s exports to the US valued at N1.8 trillion in 2022, N2.6 trillion in 2023, and N5.5 trillion in 2024 have maintained a trade surplus over the past three years.
Oil and mineral exports, comprising 92% of this total (N5.08 trillion in 2024), may mitigate direct tariff impacts if volumes hold steady. However, non-oil exports, at N0.44 trillion, remain vulnerable, and the broader economic fallout hinges on the oil price plunge.
Finance Minister Wale Edun, speaking at a Ministry of Finance Incorporated event, stressed the need to ramp up non-oil revenue to counter the oil price drop and tariff effects.
The Economic Management Team (EMT) is evaluating the 14% US tariff’s impact and will propose mitigation strategies. Edun noted that while tariffs may have a limited direct effect on oil exports, the price decline poses the real threat.
Efforts include increasing oil production and mobilizing non-oil revenue via the Federal Inland Revenue Service (FIRS) and Customs, alongside exploring budget adjustments and non-debt financing options amid global uncertainty.
Economist Paul Alaje cautioned that Trump’s tariff policies could trigger import inflation, exchange rate volatility, and reduced trade flows in non-oil sectors, exposing Nigeria’s broader economy despite its oil export resilience.
Jide Pratt, COO of Aiona and Tradegrid’s country manager, highlighted that falling oil prices will shrink revenues and foreign reserves, compounded by uncertainties in the naira-for-crude deal. Both experts underscore that while crude sales may buffer tariff impacts, the wider economic consequences are already emerging.
Nigeria’s decades-long reliance on oil has left it vulnerable to a global oil price crisis. Oil price crashing and tariff pressures amplify the urgency to strengthen quality control and traceability standards for broader global market access. As Finance Wale Edun emphasized, diversifying revenue sources is no longer optional but essential for economic stability in an unpredictable global landscape.
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