The price of Bonny Light, Nigeria’s premium crude, has fallen by 20%, dropping to $67 per barrel from $84.02 in January 2025.
This decline raises concerns about the Federal Government’s ability to meet its 2025 budget revenue targets.
The 2025 budget is based on a crude oil price benchmark of $75 per barrel, with a projected production of 2.06 million barrels per day (bpd).
The government expects to generate N36.35 trillion in revenue, with 56% coming from oil sales.
However, the price drop represents a 10.7% potential decline in oil revenue, while current production remains at 1.7 million bpd—significantly below the budget target.
According to data released by the U.S. Energy Information Administration, the price drop is due to rising crude inventories, which reached 3.6 million barrels by the end of February.
Additionally, the Organisation of Petroleum Exporting Countries (OPEC+) has announced plans to unwind its production cuts starting in April 2025, further influencing market trends.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the broader economic implications. He noted that with oil prices below $70 per barrel, revenue projections could suffer, potentially leading to a larger fiscal deficit.
He warned that an expanding deficit could impact macroeconomic stability, urging the government to reconsider its spending plans based on evolving revenue expectations.
Despite the concerns, Yusuf pointed out a silver lining: lower oil prices could reduce energy costs, benefiting businesses by making operations more affordable.