The price of Nigeria’s Bonny Light crude fell sharply to $69.90 per barrel yesterday, marking a 6.8% drop from its previous level above $75 per barrel in the global market.
The decline followed U.S. President Donald Trump’s announcement of sweeping new tariffs, coupled with the decision by the Organisation of the Petroleum Exporting Countries (OPEC+) to accelerate its phased increase in oil production starting May 2025. This move is expected to increase global supply, putting downward pressure on prices.
Potential Impact on Nigeria’s 2025 Budget
The price slump could have significant implications for Nigeria’s 2025 budget, which is based on an oil production target of 2.06 million barrels per day (bpd) at a benchmark price of $75 per barrel. The government anticipates generating N36.35 trillion in revenue, with 56% of that expected from oil sales.
Meanwhile, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that crude oil output, including condensates, fell by 3.8% month-on-month, from 1.737 million bpd in January 2025 to 1.671 million bpd in February 2025.
OPEC+ Adjusts Production to Stabilize Market
Despite concerns over falling prices, OPEC+ remains committed to ensuring market stability. Key member nations, including Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman, reaffirmed their dedication to a healthier oil market outlook by gradually increasing production.
In a statement released yesterday, OPEC+ noted:
“The eight OPEC+ countries, which previously announced additional voluntary adjustments in April and November 2023, namely Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman, met virtually on April 3, 2025, to review global market conditions and outlook.
“In view of the continuing healthy market fundamentals and the positive market outlook, and in accordance with the decision agreed upon on December 5, 2024, subsequently reaffirmed on March 3, 2025, to start a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from April 1, 2025, the eight participating countries will implement a production adjustment of 411,000 barrels per day in May 2025.”
The statement further highlighted that the increase comprises the planned increment for May, along with two additional monthly increments. However, the organization emphasized that the adjustment remains flexible and could be paused or reversed depending on market conditions.
“This flexibility will allow the group to continue supporting oil market stability,” the statement added. “The eight OPEC+ countries also noted that this measure will provide an opportunity for the participating countries to accelerate their compensation.”
The countries reaffirmed their commitment to the voluntary production adjustments agreed upon at the 53rd Joint Ministerial Monitoring Committee (JMMC) meeting on April 3, 2024.
Market Outlook and Economic Implications
While the increase in production may stabilize global supply, the uncertainty surrounding oil prices could pose challenges for oil-dependent economies like Nigeria. Analysts warn that sustained lower oil prices could lead to revenue shortfalls, potentially affecting government spending and economic growth.
