The renewed trade war between the United States of America, USA, and some developed economies has put more pressure on crude oil prices bringing more threat to Nigeria’s 2025 budget.
Global crude oil market closed lower with Bonny Light, Nigeria’s premium crude oil grade, dropping to $70.3 per barrel, weekend, indicating significant 13 percent decline since the 2025 budget was passed and trend to about 6.7 percent below the 2025 budget benchmark of $75 per barrel.
Industry experts told Financial Vanguard that the downward trend would continue this week given the root cause.
The renewed downward trend began early last week when US President, Donald Trump, signified his intention to sustain tariff war across selected major global economies.
This came at same time the Organization of the Petroleum Exporting Countries and allies including Russia, OPEC+, decided last Monday to increase output for the first time since 2022, pressuring crude prices further down.
Oil industry analysts told Financial Vanguard that with N20.35 trillion or 56 percent of Federal Revenue expected to come from oil out of the N36.35 trillion revenue target, the decline in crude oil price has raised the possibility of increased budget deficit for the year, and possibly increase in borrowing to fund deficit spending.
International energy analysts had stated last weekend that oil prices settled down for the fourth consecutive session on Wednesday after U.S. crude oil stockpiles posted a larger-than-expected build up, adding a further headwind as investors worried about OPEC+ plans to increase output in April and U.S. tariffs on Canada, China and Mexico.
According to reports from Investopedia, Oil markets have been rattled in recent days by President Trump’s imposition on Tuesday of a 25 percent tariff on Canadian and Mexican goods. Trump also doubled tariffs on Chinese imports to 20 percent.
“Oil prices have been driven down from Monday’s OPEC+ decision to increase oil production starting in April. The gradual increases will unwind the production cuts the group of major oil producers committed to in November 2023.
“Lower oil and gas prices were a major focus for Trump on the campaign trail last year. He promised America would “drill, baby, drill” to reduce transportation costs and, ultimately, temper inflation. Oil prices have fallen steadily under Trump, with WTI down about 15% since his inauguration, and fuel prices have declined marginally over the past month.”