Nigeria’s 2025 budget faced intensified strain on May 1, 2025, as the price of Bonny Light crude oil fell to an average of $60 per barrel from $65 per barrel in the international market, well below the budget’s benchmark of $75 per barrel. The budget, heavily reliant on oil revenue for 56% of its projected N36.35 trillion, also assumed a production target of 2.06 million barrels per day (bpd), including condensate. However, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported in its latest Monthly Oil Report that March 2025 output dropped to 1.6 million bpd from 1.7 million bpd in February, a shortfall of over 400,000 bpd against the budget target.
The decline in oil prices stems from global market dynamics, with increased production and exports from multiple countries exacerbating oversupply. The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, decided to phase out voluntary output cuts, boosting production by 411,000 bpd starting in May 2025, further depressing prices. This follows a 20% price tumble in early April, with Brent crude falling below $60 per barrel before recovering slightly to $65, driven by U.S. tariffs and OPEC+’s accelerated output hikes.
Olatide Jeremiah, CEO of Petroleum Price NG, warned in a Vanguard interview that the price drop will hinder budget implementation. “We are witnessing a major drop in crude oil prices, expected to affect the nation’s budget,” he said, noting potential reductions in depot prices for petroleum products if the trend persists. Farouk Ahmed, CEO of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), expressed mixed sentiments, stating, “As consumers, we are happy that the price is coming down, but as a nation, it’s not good for our economy because our revenue inflow is impacted.” He attributed market instability to inconsistent policy signals from U.S. President Donald Trump, complicating price predictions.
The budget shortfall, compounded by a N13.08 trillion fiscal deficit and N14.32 trillion allocated for debt servicing, threatens critical sectors like infrastructure and social interventions. Analysts highlight Nigeria’s vulnerability due to its oil dependency, with posts on X reflecting public concern over the budget’s viability at current prices and output levels. The government’s ability to diversify revenue sources and address production challenges, such as pipeline vandalism and oil theft, will be crucial to mitigating these economic pressures.
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