- Bonny Light crude price drops to $67 per barrel, 20% below January 2025 levels.
- Federal Government’s 2025 budget faces revenue shortfalls due to lower oil prices and production.
- OPEC+ decision to ease production cuts and rising inventories contribute to price decline.
- Experts warn of potential fiscal deficits but highlight potential benefits for businesses from lower energy costs.
The price of Bonny Light, Nigeria’s premium crude oil, has fallen sharply by 20% to $67 per barrel, down from $84.02 per barrel in January 2025. This decline has sparked concerns about the Federal Government’s ability to meet its 2025 revenue targets, as the budget is based on a crude oil price benchmark of $75 per barrel.
The 2025 budget assumes oil production of 2.06 million barrels per day (bpd) and a total revenue target of N36.35 trillion, with 56% expected to come from oil sales. However, the current crude oil price represents a potential 10.7% shortfall in the government’s oil revenue target. Compounding the issue, Nigeria’s oil output remains at 1.7 million bpd, significantly below the budget benchmark of 2.06 million bpd.
The U.S. Energy Information Administration (EIA) attributed the price drop to rising inventories, which reached 3.6 million barrels by the end of February 2025. Additionally, the decision by OPEC+ to unwind its production cuts starting in April 2025 has further pressured global oil prices.
In an interview with Vanguard, Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the far-reaching implications of the situation. He noted that the drop in oil prices could negatively impact both revenue and foreign exchange earnings, potentially leading to a larger fiscal deficit than planned.
Dr. Yusuf cautioned against maintaining the current expenditure profile, warning that an inflated deficit could destabilize the economy. However, he also pointed out a silver lining: lower energy costs could benefit businesses by reducing operational expenses.